Willis: Professional And Liability Rates Slashed

by Stewart Douglas

Story link: Willis: Professional And Liability Rates Slashed

Insurance premium costs across Directors’ & Officers’ liability lines have fallen to some of their lowest rates in seven years, according to the results of a survey published today by London insurers Willis.

According to the Willis’ Financial Executive and Professional Risks Division pricing index premiums for Directors’ & Officers’ liability cover had fallen to similar levels as back in 2000, which was derived from its examination of empirical evidence in relation to the outlook for the underwriting market and upcoming market forecasts.

The survey, conducted over London-based insurers
reflected discounts of, on average 10% in the FI markets over the third quarter, whilst it also reported that the flooding of the summer had yet to have any impact on the cost of insurance premiums in financial markets.

During the last quarter, almost 25% of insurace companies offering D&O cover were in favour of renewals reflecting no discount on previous prices, whilst a substantial minority of insurers were in favour of reductions up to one fifth in flagship premium rates.

Additionally rates throughout professional indemnity markets were reflecting a downward trend over the course of the third quarter, despite fears from within the markets that rates could take some time to reach the lower levels of 2000 as other had optimistically projected.

Speaking today on the findings, FINEX chairman Roland Avery said that the evidence reflects a ‘buyer’s market’ in relation to financial industry policy cover, yet warned that there remained a potential for significant upheaval arising from the fallout of the sub-prime collapse and an general slowing in economic growth.

It remains to be seen whether the impact of the 2006 Act in relation to directors’ duties will have any further bearing on the price of D&O cover policies over the near future as it is brought fully into force, and whether the forecasts of the FINEX index will ring true over the coming quarters.