D&O prices fall 14.7% in Q3, breaking 17-quarters of price increases: Aon
According to a recent survey, liability prices for directors and officers fell 14.7% in the third quarter.
Aon’s Financial Services Group’s Q3 2022 price index for the quarter ended September 30 declined to 1.57 from 1.96 in the prior year quarter, the second quarter decline since Q4 2017. Average cost of $1 million in limits declined by 19.9% compared to the previous -year quarter.
The Aon report noted that Q3 2022 results were significantly impacted by a single large IPO customer who bought a multi-year program in Q3 2021 and as such was not in the current quarter. Adjusted for the exclusion of this single customer, the price index fell by 14.7% in the third quarter of 2022.
Almost all renewing companies extended with the same limit (98.4%t) and the same carrier (98.4%). Most renewals are also extended with the same deductible (89.8%) and limit and deductible (89.8%) These figures are in line with historical data.
Still, the report found that nearly half of innovative primary policies saw a price drop (46%), while about 38% saw virtually no change and about 16% saw an increase. Those who renew with the same limit and deductible saw an average price drop of 9.4%, while the small percentage who saw a premium increase paid just 5.5%. Overall, primary policy prices declined 4%.
This 19.9% year-over-year drop in the third quarter D&O price index represents the second quarter of year-over-year declines, breaking a 17-quarter streak of price increases for policies that renew at the same limits and deductible.
The price index includes all limits bought during the quarter by publicly traded companies. Changes in customers renewing during the quarter, changes in purchased limits, or a shift in the mix of limits between TBEN limits and Side-A-only limits can affect the index’s overall performance.
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