D&O problems ahead, says ratings agency
The US directors’ and officers’ (D&O) liability insurance market is heading for a severe downturn in underwriting, according to AM Best.
The ratings agency says the market has stayed highly competitive over the past two years and this – combined with the higher frequency and severity of claims – suggests underwriting deterioration lies ahead for most D&O writers.
AM Best says the subprime credit crisis, weakened global economy and declines in the stock market will drive the increase in claims.
But it believes capacity in the D&O market may not reach the critically low levels predicted.
“The current cycle has more surplus capacity and more insurers with D&O underwriting skill, which may reduce the possibility of a crisis in D&O capacity,” the agency said in a statement.
The ratings agency says the market has stayed highly competitive over the past two years and this – combined with the higher frequency and severity of claims – suggests underwriting deterioration lies ahead for most D&O writers.
AM Best says the subprime credit crisis, weakened global economy and declines in the stock market will drive the increase in claims.
But it believes capacity in the D&O market may not reach the critically low levels predicted.
“The current cycle has more surplus capacity and more insurers with D&O underwriting skill, which may reduce the possibility of a crisis in D&O capacity,” the agency said in a statement.