Directors and Officers Price Increases Continue in Third Quarter

The average cost for $1 million in directors and officers (D&O) insurance limits increased 4.3 percent during this year's third quarter from the same quarter in 2020, according to Aon Commercial Risk Solutions.

The Quarterly D&O Pricing Index: Third Quarter 2021 report from Aon's Financial Services Group showed that this year's July through September period was the 15th consecutive quarter of year-over-year D&O price increases following a period of 18 quarterly price decreases over the preceding 4 years.

According to the Aon report, 2 percent of primary directors and officers policies renewing with the same limit and deductible experienced a price decrease, 17 percent were flat, and 81 percent saw a price increase. The overall price change for primary policies renewing with the same limit and deductible was a 7.3 percent increase, Aon said.

The Aon report found that 93.2 percent of primary D&O policies renewed during this year's third quarter were renewed with the same insurer. On average, primary directors and officers policies that renewed during this year's third quarter with the same limit, deductible, and insurer experienced a 7.5 percent premium increase, while policies that renewed with the same limit and deductible but a different insurer saw a 3.4 percent increase during the third quarter.

The report said that 95.8 percent of primary policies renewed with the same limit, 78.8 percent with the same deductible, and 75.4 percent with both the same limit and deductible.