A survey of Airmic members has found that one fifth of those surveyed experienced price rises for directors and officers (D&O) lines of over 400%.
The survey, conducted in August, surveyed risk managers on their experience in the harsh market.
“Broken down by class of business, D&O saw the most exponential rise in pricing,” Airmic said. “A fifth of respondents said they had experienced a rate increase of more than 400%.
“A majority experienced D&O rises of at least 50%, and almost 30% said prices had doubled.”
D&O has seen a “dramatic” increase in pricing, and has driven 40% of risk managers to consider captives for D&O Side B and C.
When it came to Side A coverage, which is traditionally harder for a captive to find a solution for, 10.3% were considering using a cell or microcaptive.
“For Sides B and C coverage (i.e. to reimburse an organisation after having defended or indemnified a director, typically reserved for publicly listed companies, and to protect the corporate entity from its own liability exposures, respectively), 42.9% were considering placing such protections within their captive and 3.6% said they would consider other options for funding mechanisms,” the Airmic report said.
“For Side A coverage (i.e. protection for individual directors where a company cannot or has refused to indemnify them), 10.3% are considering using a cell captive solution and the same proportion are mulling over self-funding mechanisms.”
Chair of Airmic and Director of Insurance and Risk Financing at BT Group, Tracey Skinner said that the harsh market should force brokers to not be “lazy”.
“We’ve gone from very a soft to a hard market very quickly,” she said. “A lot of brokers have never operated in a hard market before. They’ve become accustomed to lazy buying and lazy broking, and it’s hard to turn that around overnight.