The subprime meltdown and global credit crisis will have a major impact on directors’ and officers’ (D&O) insurance, with losses predicted to far exceed earned premium.

According to a report by commercial insurance data collector Advisen, this will cause rates to increase next year.

Advisen has revised its forecast of losses to D&O insurers to $US5.9 billion ($8.79 billion) and predicts insured loss will add 229 points to this year’s loss ratio for the financial institution segment of the D&O market.

“While premiums for financial institution liability have already increased, the soft phase of the overall commercial lines market cycle will bottom out by the second quarter of 2009 and a period of rising premiums for all commercial lines will ensue by the end of the year,” the report said.