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D&O rates to keep rising, Honan says

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The directors’ and officers’ (D&O) insurance market will harden even further, driven by claims pressure following the Hayne royal commission and a growing risk of well-funded class actions against companies, Honan says.

The broker says it has rebranded its financial and professional risks division as professional and executive risks to reflect its expertise in helping clients navigate the market.

“D&O is an exceptionally complicated insurance market, with carriers responding assertively to claims pressure and continuing growth in securities class actions, litigation and the prospects of further action arising [this year] and beyond,” Professional and Executive Risks Head Henry Clark said.

“The primary driver for the current hardening D&O market is the growth in securities class actions led by opportunistic law firms backed by litigation funders, and predictions that further claims pressure will arise from the Hayne royal commission [and] privacy regulation.”

He expects capacity will become “inadequate to cover increasing and expensive claims” as insurers leave the market.

Honan’s rebranded division will work with clients on strategies to reduce premiums and obtain optimal cover.