RIMS survey finds softening of D&O rates

North America

Despite concerns about losses arising from the continuing crisis in the sub-prime mortgage market, the average directors and officers liability (D&O) premium rates in the US fell 11.0% in the fourth quarter of 2007, according to data collected for the latest quarterly Risk and Insurance Management Society (RIMS) Benchmark Survey. The commentary accompanying the survey sees this sharp fall in pricing as a sure sign that the soft cycle in the D&O market has not quite reached its bottom phase. However, there is also the anticipation that the soft market will take its toll on insurers’ earnings; even as early as the second quarter of 2008. However, this particular trend in the D&O market far outstripped decreases in other markets. More modest decreases were recorded in the general liability (down 3.0%) and property (down 1.3%) markets. Average workers’ compensation premium rates fell by 1.4% during the quarter. This represents a stark contrast to workers’ compensation trends in the US in 2006 when rates fell sharply largely due to reform measures in several large states. But since then, prices in the US workers’ compensation market, still highly competitive, has drifted towards a state approaching stability.