According to Aon’s quarterly Public Company D&O Pricing Index, the average price per million for public company directors and officers (D&O) liability insurance declined for the fifth consecutive quarter in the second quarter of 2023, down 26.8% compared to 2022.
This five-quarter run of pricing decreases follows 17 consecutive quarters of increases over the prior four years, noted Aon.
Most primary policies (83%) renewing with the same limit and deductible saw an overall average price decrease of 13.8%. Just 3% of policy renewals experienced a price increase at an average price increase of 30.2%, and 13% remained flat. The majority of primary policies renewed with the same limit and deductible (81.5%), and the overwhelming majority remained with their incumbent carrier (96%).
The broker noted that, by looking at only primary policies that renewed with the same limit and deductible, it can eliminate some “noise” in the data and get a more accurate measure of the market. By that measure, the price per million decreased 21.8%.
Several clients with prior-year initial public offerings (IPOs) and deSPACs (Special Purpose Acquisition Vehicles) renewed during the quarter with pricing decreases of 42% and 45% on average, respectively. Excluding these larger decreases, Aon recorded a price-per-million decrease of 23.7%.
Securities class action filings are expected to increase slightly in 2023, with a projected 4% year-over-year rise to 205 from 197. Plaintiffs filed 56 cases, or one fewer case, in the second quarter compared to the same period in 2022.