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The UK directors and officers (DandO) insurance market has begun to stabilize following a period of growth. It was worth £199.8m in 2015, down 0.5% from 2014. Rates are softening, with the steepest declines at the larger end of the market due to overcapacity driving competition. On average rates are estimated to be falling by 3-5% per year. However the market is still highly profitable, with the COR expected to lie between 60-80%. Despite rates falling, the value of the market is stable due to increasing penetration within the SME market. DandO cover among large corporate organizations is near full capacity, so now the market has turned its focus on increasing penetration within the SME market - where over a third now hold the product. However, there is still great potential for brokers and insurers to grow in the SME space, by increasing awareness of the product and its importance. DandO claims for insurers are low-frequency but high-severity. The financial crisis has resulted in a more litigious and regulatory society, which has put more directors and officers at risk. Claims are also related to the economic and political landscape, any negative impacts of which may generate a greater frequency of claims. Brokers remain the dominant distribution channel, as clients still seek advice and guidance when purchasing cover. The product itself has remained relatively unchanged, although cyber insurance and events such as Brexit are providing insurers with opportunities to innovate and diversify. Greater change is being seen in how the product is distributed, with underwriting processes moving towards automation. Over the next five years the market is forecast to decline slightly to be worth £194.8m in 2020, as a result of falling rates being marginally larger than growth seen within the SME market.
- The UK DandO insurance market was worth £199.8m in 2015, and is forecast to decline modestly by 2.5% to reach £194.8m by 2020.
- 33.8% of SMEs held DandO insurance in 2016, with penetration highest among medium-sized enterprises.
- 52.9% of SMEs purchased DandO insurance through a broker in 2016.
Verdict Financial's "UK Directors and Officers Insurance: Market Dynamics and Opportunities 2016" report provides an in-depth analysis of the UK DandO insurance market. It looks at market size and profitability, as well as changes in premiums, claims, distribution, regulations, and opportunities. It provides a thorough overview of the market along with future forecasts.
Reasons To Buy
- Benchmark yourself against the rest of the market. Ensure you remain competitive as new innovations and insurance models begin to enter the market.
- Adapt your distribution strategy to ensure it is efficient and still meets customer purchasing behaviour.
- Arthur J Gallagher
- XL Catlin