A newly released 2025 benchmarking report from The Baldwin Group, produced in collaboration with Nasdaq, suggests that some public companies may be carrying significantly more Directors & Officers (D&O) insurance than their risk exposure requires. The report is based on data from over 250 companies and provides a sector- and market-cap-specific analysis of D&O insurance structures and costs.
Decline in Premiums and Retentions Continues
Soft market conditions extended into 2024, with average retention levels dropping from $2.5 million to $1.5 million and the average premium for $5 million in limits falling to $277,985, down from $315,222 in 2023. The overall average rate change was -9.7%, with the technology and healthcare sectors experiencing the largest reductions at -15.0% and -13.6%, respectively.
Coverage Levels Exceeding Risk Exposure
The report highlights a notable gap between insurance purchasing behavior and actual claims data. Among mid-cap public companies — those valued between $500 million and $1 billion — many are purchasing up to $40 million in D&O coverage. However, based on data from Stanford Securities Litigation Analytics and Baldwin’s own benchmarking, average securities class action settlements are approximately $8.2 million, with total costs including legal fees ranging between $12 million and $15 million.
This suggests that such companies may be over-insured by $10 million to $20 million, based on historical claims trends.
Executive Commentary
“This year’s data, like the past few years, still shows rates are coming down at renewal; however, we still believe most companies aren’t deploying their capital strategically,” said Michael Tomasulo, Senior Managing Partner & National Practice Leader at The Baldwin Group. “Our data shows that while a company may be purchasing $40 million in D&O limits, their actual claims exposure might be a fraction of that.”
Dan Galbraith, President of The Baldwin Group and CEO of its Retail Brokerage Operations, added: “Too often, insurance decisions get treated as one-off transactions. At Baldwin, we take a different approach — advising companies on the smartest path forward based on their actual risk exposure, business goals, and capital priorities.”
Benchmarking and Strategic Alignment
The Baldwin Group’s report includes benchmarking tools that allow companies to compare their D&O insurance programs against peers based on sector and market cap. While ongoing premium reductions suggest short-term savings, the report emphasizes that misaligned coverage levels could reduce the long-term strategic value of these programs.
For more information or to request access to the full benchmarking report, visit www.baldwin.com.
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