As D&O insurance and claims have experienced a negative shift in pricing, it creates new challenges to navigate loss ratios while maintaining revenues. While several factors have played into the continued decline, companies will need to navigate the following five D&O insurance trends moving forward.
D&O Insurance Cyberattack Claims
No matter the industry or size of a company, every business faces a potential cyberattack. Even Fortune 500 companies with the budgets to have the best IT systems still fall victim to these attacks. When that happens, it may mean billions of dollars in losses. Even if a company does not get a ransom threat, a data breach may lead to lawsuits, leaving a business reeling with unexpected losses. Investors and board members must play a role in securing these systems and avoiding cyber incidents to avoid a breach of duty and turning to a D&O policy for help.
New ESQ Requirements
Recent regulations now require companies to disclose and collect information regarding their environmental, social, and governance policies. It will require due diligence, as inaccurate information may lead to lawsuits or share price changes. For companies just putting these policies into place, it may open the door to errors or omissions that have a financial impact and a reputational impact on social and environmental groups.
Ongoing Recession
The ongoing recession has also affected D&O insurance. Along with post-pandemic issues, such as a supply chain shortage and higher transportation costs, many businesses feel negative effects from different directions. Even as businesses strive to take on these challenges, it has led many to see a significant loss of revenue. Finding solutions to navigate these challenges remains crucial for any business’s survival.
Underwriting Concerns
When it comes to getting D&O coverage, underwriters play a key role. Unfortunately, recent trends have created more challenges for underwriters regarding risks. Renewals and new business policies will likely need to undergo more stringent protocols, making it more critical than ever for businesses to have strategies to combat those risks. The rise of new industries, such as cannabis and cryptocurrency, also has created new concerns for underwriters. Recent trends show an increase in cryptocurrency companies getting targeted for litigation. As one of the significant companies collapsed, it has signaled the industry has a volatile nature that many insurance companies may want to avoid.
D&O Insurance Settlements
The number of securities class action settlements continues to rise, and they often come with some significantly high settlements. While regulatory bodies continue to increase awareness and scrutinize these lawsuits, many settlements still happen yearly. Those settlements could exceed $1 billion, dramatically impacting the insurer and the companies it insures.
For D&O insurance companies, many of these trends have meant making some hard decisions, such as increasing premiums or not renewing policies. Setting new benchmarks and investing in technologies to better measure risk and exposure continues to unveil itself as one solution to recent challenges.
About Haughn & Associates
Founded by Michael Haughn in 1986, Haughn & Associates is a full-service, family-owned, independent insurance agency based out of Dublin, Ohio. H&A strives to provide the best possible price and unique insurance solutions across a myriad of industries, including construction, IT, Habitation & Commercial Property, Agriculture, and Engineering. Devoted to providing the best of business insurance, life and disability insurance, personal insurance, employee benefits, and bonds, H&A is proof that success lies in long-standing client relations and satisfaction. To learn more about how H&A can be of service to you, contact us at (877) 802-2278.
