AIG whitepaper highlights challenging D&O market

The outlook for the D&O market remains challenging as the risk environment is more uncertain than ever, according to a new whitepaper from AIG, entitled A Changing D&O Environment in EMEA: More Volatility Ahead?

The whitepaper says external factors are expected to be the driving force for D&O claims, potentially putting pressure on the sustainability of the market. It examines four key topics that will have an influence on the D&O claims landscape in Europe, the Middle East and Africa: economic inflation; social inflation; supply chain disruptions; and the EU Collective Redress Directive.

The AIG whitepaper notes that during the past few years, and especially in the last two, purchasers of D&O insurance have experienced premium increases, coverage restrictions and sometimes a shortage of capacity available as a result of surging loss costs, as D&O claims have increased both in frequency and severity.

It explains that the long-tail nature of D&O insurance in combination with growing claims inflation have led to many D&O insurers posting losses in the past few years, adding that there are no signs that loss costs will improve in the near to mid-term.

The AIG whitepaper concludes: “With traditional types of D&O claims likely to remain and the addition of macroeconomic uncertainty, enhanced regulatory activity, society’s heightened focus on corporate social responsibility and the passing of new legislation to support consumers, exposures remain elevated for the foreseeable future.”

The full whitepaper, A Changing D&O Environment in EMEA: More Volatility Ahead?, is available here.

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