Aon says non-traditional and alternative solutions may need to be increasingly explored as conditions in the directors’ and officers’ insurance market remain challenging in Australia and overseas.

“As an industry, in the medium to longer term we must be aiming for a global approach to addressing the significant challenges impacting the D&O insurance marketplace,” it says in a report.

Non-traditional insurance markets, alternative risk transfer vehicles and alternative capital providers are among areas to be explored, it says.

The report, titled Directors’ & Officers’ Insurance Market Insights, says London appetitive below a $100 million liability limit abruptly weakened in the third quarter of last year.

Australian insurers are continuing to closely monitor portfolios and securities entity cover remains a difficult area.

“Aon continues to see an upward trend of incumbent insurers non-renewing business due to more stringent underwriting guidelines,” it says.

Insurer appetite remains strong for traditional coverage outside the securities entity arena, but law reforms are throwing up additional risks for the directors’ and officers’ market.

“The emerging case law and other legislative developments do not currently, in our view, provide a sufficient basis for insurers to alter their views on the litigiousness of the securities class action environment or to accurately model potential future losses,” the broker says in the report.

Click  here to access the report.