Longer-term increases in litigation activity, defense costs and settlement trends, offset by a pandemic-induced disruption in claim trends, drove directors and officers (D&O) liability underwriting volatility recently.
The rebound in segment underwriting performance following weaker 2017–2020 results may prove short-lived, as the industry direct loss ratio rose by 5 percentage points in 2022 to 69%, which is still consistent with a small underwriting profit.
Industry direct written premiums expanded by 134% from 2018 to 2021. Shifts in pricing momentum led to an 9% decline in 2022 direct written premiums. Earned premiums are positioned to fall in 2023, leading to further loss ratio deterioration.