Pricing is plunging for U.S. based directors & officers liability insurance.

Aon Risk Solutions’ latest quarterly pricing index noted a double-digit decline. Fitch Ratings said that D&O liability and other U.S. commercial market segments are turning soft, with predictions that competition will continue to drive prices lower in the broader commercial sector, “in part due to past underwriting success.”

Fitch made its case by noting the Aon report, plus Willis’s recent Market Realities 2016 report that suggested public company and financial institution company D&O renewal rates will be flat or slightly down in 2016.

According to Aon, D&O price per million dropped 10.3 percent during the quarter over same period in 2014. Price per million for clients that renewed in both the 2015 and 2014 third quarters declined 10.1 percent, Aon said.

Aon’s additional D&O statistics from the quarter:

• 34 percent of primary policies renewed with the same limit and deductible saw a price decrease. 21 percent had a price increase.
• Overall price change for primary policies renewing with the same limit and deductible dipped 1.6 percent.

What would it take for D&O premiums to increase? Fitch said that the market would need “considerable further weakening in underwriting performance” to help the sector return to positive premium rate growth.

Planned mergers between ACE and Chubb, Tokio Marine’s acquisition of HCC Holdings and the XL/Catlin merger concentrated the D&O market, but competition remains and there continues to be plenty of underwriting capacity, Fitch said.

Source: Aon Risk Solutions Fitch Ratings