COVID-19, Unresolved Court Cases, and Record Settlements. Hard Market Shows No Signs of Easing Up.
San Francisco, CA – Woodruff Sawyer, one of the largest independent insurance brokerages in the US, announced today the release of the D&O Looking Ahead Guide 2021. Since 2013, the Guide has reflected on and predicted the state of Directors and Officers liability insurance for corporations, often calling out significant milestones and challenges for businesses and the marketplace alike. This year is no exception.
Woodruff Sawyer’s 2019 Looking Ahead Guide forecasted the rise of D&O premiums—the first increase in nearly 10 years—and predicted it would continue on into 2020 and beyond. Today, that rise shows no sign of decline as securities class action lawsuits and record settlements, corporate bankruptcies, and COVID-19 continue to impact an already-difficult market. To add additional pressure, insurers are watching as over 600 unresolved securities class action court cases wind their way through the judicial system.
The Guide includes Woodruff Sawyer’s Underwriter Survey. The Survey reveals that underwriters are concerned that their insureds are not fully aware of the high cost of litigation. Eight-three percent (83%) of underwriters believe that companies underestimate the current risk and cost of litigation. That doesn’t bode well for insurance renewals for the riskiest clients—recently IPO’d biotech and technology companies—whose volatile share prices often make them targets for shareholder litigation.
But there may be a glimmer of hope for more moderated D&O insurance premiums in the future, particularly for IPO companies. Priya Huskins, Senior Vice President, Management Liability and editor of the “D&O Notebook” blog series notes, “A significant cause of the high price of D&O insurance has been duplicative federal and state court Section 11 suits filed against IPO companies. Earlier this month we just saw the first state court opinion overturning a state-filed Section 11 lawsuit for a lack of jurisdiction. That decision turned on the presence of federal choice of forum provisions, an option that was created by the March 2020 Delaware Supreme Court decision in Sciabacucchi —but it was unknown whether state courts would comply. If other state courts follow the precedent set by this first dismissal, the trajectory of IPO D&O insurance pricing will change for the better.”
Sign up to attend Woodruff Sawyer’s 2021 D&O Looking Ahead Guide Webinar on September 30, 2020 from 9 AM-9:45 AM PDT.
About Woodruff Sawyer
As one of the largest insurance brokerage and consulting firms in the US, Woodruff Sawyer protects the people and assets of more than 4,000 companies. We provide expert counsel and fierce advocacy to protect clients against their most critical risks in property and casualty, management liability, cyber liability, employee benefits, and personal wealth management. An active partner of Assurex Global and International Benefits Network, we provide expertise and customized solutions where clients need it, with headquarters in San Francisco, offices throughout the US, and global reach on six continents. For more information, call 844.972.6326, or visit woodruffsawyer.com.