D&O risks in 2021
We see 2021 as the year of hope, but needless to say, it will be a challenging one. From rising insolvency claims, cyber threats to climate change activism, the risks for directors and officers have intensified in 2021.
Next to the greater risks, since the beginning of 2020, there have been more and more
signs that the insurance market is hardening. Natural disasters, mergers of a number of
major insurance players (NN-Delta Lloyd, Ace and Chubb, and Axa and XL / Catlin), and great losses due to the Covid 19 pandemic have all contributed to rising premiums and stricter appetite.
Rising insolvency, cyber and environmental claims
Even before the pandemic, Brexit together with the US and China trade wars painted a picture of uncertainty. Insolvency claims typically rise in economically trying times, and 2020 was no different. The trend is likely to increase in 2021, together with D&O claims resulting from insolvency. The same applies to cyber risks, which have greatly increased with the introduction of complete homeworking.
Another major concern in 2021 is environmental, social, and governance (ESG) activism where activists put pressure on public companies and their leadership to prioritize diversity and take appropriate action to mitigate the risk of climate change. Failure to do so may lead to a D&O claim.
Lack of capacity and an increase in primes
Insurers are responding by heavily reviewing appetite and capacity and tightening terms and conditions. It is becoming more challenging to achieve 100% insurance capacity in the first instance.
Last year, Financial Lines again saw the highest price increase compared to the other branches. A price increase of 24% was achieved in continental Europe, ranging from large accounts to middle market accounts.
By no means should this stop you from adequately insuring your D&Os.
Skillful and creative brokers can help define risk more accurately through in-depth risk assessment, claims history, and lessons learned for the future (prevention).
Close collaboration and alignment of interests between you, your broker, and the insurer are essential during the hard insurance market.
The role of the captive
Thanks to the combination of international strength and local expertise, Concordia is the right broker to help you access risk financing and risk retention solutions. One of the options is forming a “captive”.
It is not a magical solution but with a long-term strategy, captivities can provide peace of mind and adequate protection in times when commercial insurance is lacking capacity and has become more expensive.
Turn to our team of experts to guide you in finding the best possible conditions. Reach out to us today!