The D&O insurance market is under pressure, with premiums dropping substantially over the past 9 quarters despite rising claims severity, creating a dangerous gap between pricing and actual exposure.
Intense competition and consolidation among brokers have driven down prices unsustainably. Underwriters are shifting focus from broad benchmarking to evaluating each company’s unique risk profile due to growing risk complexity and market volatility. Investor lawsuits are becoming more financially significant, with losses claimed in securities litigation far outpacing the overall growth in U.S. market capitalization. Since 2020, the U.S. equity market has grown by about 22%, but alleged losses from securities lawsuits have grown by over 50%. In early 2025 alone, investors claimed nearly $300 billion in losses, almost half the amount claimed in all of 2024.
TransRe reports the market is now unprofitable, with projected loss ratios exceeding 70%, and says immediate and significant price increases are required. The reinsurer emphasized that rationales for current low pricing, such as new capacity, fewer class actions, and higher investment yields, are “as unconvincing as ever.” Despite attempts to hold rates steady, carriers are fighting for flat renewals and losing, as pricing momentum remains negative. The market is effectively giving back the profits it hadn’t even booked yet, following the temporary profitability seen in 2021 and 2022. As noted by TransRe, price increases are currently being applied only to accounts with claims or other concerning developments. The rising severity of claims will require insurers to maintain strong reserves and carefully manage litigation costs to remain financially stable in the current market environment.
Churchwell Insurance tracks D&O market trends and data, such as falling premiums and rising risks, giving our public companies the information they need to make confident decisions on risk management. Reach out to Churchwell today for a comprehensive risk review of your directors and officers program!
