A new survey by Willis concludes that “the commercial sector continues to resist the sharp rate increases for Directors & Officers insurance seen in the financial institutions sector, with the average premium for commercial business falling five percent in the second quarter.”
Willis noted that the “five percent reduction is for commercial clients with strong risk profiles.” However, reductions are smaller for those more directly impacted by the financial downturn or with highly leveraged balance sheets. In some cases these entities might have “slight increases in premium.”
In comparison, financial institutions have experienced “double-digit percentage premium increases” during the second quarter, as the fallout from the credit crisis continues
Based on feedback from the London market, Willis expects the commercial sector will see continued small reductions over the next three months.
The Willis D&O Index is produced quarterly by FINEX Global, Willis’ Financial, Executive Risk and Professional Liability business, and asks D&O insurers from Lloyd’s and the London market to comment on premium rates and coverage terms for the preceding three months, as well as make projections for the upcoming quarter.
Willis said its survey also found that the “commercial market continues to benefit from significant capacity for business domiciled outside of the USA, with new entrants into the market providing significant excess competition. It also shows that the fallout from the banking crisis has yet to filter through into significant claims.”
Julian Martin, Executive Director of Willis FINEX Global, commented: “Owing to the economic downturn, we are experiencing an increased level of scrutiny and underwriting analysis, meaning that is essential for renewal negotiations to begin early in order to deliver timely renewals. Despite this, policy coverage remains broad and the wealth of information now being requested of clients should be given particular attention and the specifics thoroughly analyzed. When it comes to renewal business, we would urge that all forms of No Claims Declaration should be avoided.”
Source: Willis Group Holdings – www.willis.com