Conning Research: Niche Focus Spells Success in D&O Market

September 2, 2008

Over the past decade, the directors and officers liability insurance market has grown faster than the broader property/casualty market, at nearly double the rate of the commercial lines average. Premium growth has come from pricing, broader coverages, and increasing penetration of the corporate marketplace, according to a new study by Conning Research and Consulting.

“The hard directors and officers market and related claims issues in the period 2000 to 2004 resulted in buyers of corporate D&O, especially larger ones, becoming much more sophisticated in their management of D&O exposures,” said Mark Jablonowski, analyst at Conning Research & Consulting.

“This increased sophistication is reshaping the market at the upper end. At the same time, awareness of D&O exposures among midsized and small companies, including private and not-for-profit companies, has increased. As a result, this market is growing in the face of a soft overall market for property/casualty, and the small and mid-account segment is less volatile.”

The Conning Research study, “Directors’ and Officers’ Liability: Finding the Right Niche,” presents the current state of the line of business in relation to recent history, analyzes current competitive dynamics, and outlines potential future issues in the market.

“On the supply side, insurers are finding that allocating capital in responding to the needs of larger, more sophisticated buyers can have its pitfalls,” said Stephan Christiansen, director of research at Conning Research. “Among them are increased exposures to mega-losses, and competition from alternative structures and off-shore markets. At the other end of the market, midsized and smaller accounts present a niche market with substantial growth potential — even in this soft market. Carefully crafted niche play can provide a profitable outlet for increasing capacity in the D&O line.”

Source: Conning Research & Consulting,

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