Insights

2016 D&O Insurance Renewals: Looking Ahead

October 1, 2015

Management Liability/D&O

Woodruff Sawyermpany’s annual “Looking Ahead” interactive guide for the 2016 insurance renewal season is here. This guide provides key insights into the D&O insurance market as well as regulatory and litigation trends to watch.  This information will help companies prepare for their 2016 insurance renewals.

Download your complimentary copy for more in-depth information on these issues. And continue reading for highlights.

Looking Ahead at the Market: Pricing, Coverage and Considerations

Premiums are decreasing for most D&O insurance buyers – but not for everyone. A CIAB survey showed that approximately 46 percent of companies reported a flat renewal and about 22 percent experienced a modest decrease from 1 to 10 percent.

Woodruff Sawyer’s own data set shows promising signs for the market—and this is despite the fact that more than half of the data is from life science, technology and first/second year renewals for IPOs (categories that price at the higher end of the spectrum).

Looking at year-over-year changes in premiums for entire programs:

  • Forty-one (41) percent experienced a decrease in total premiums at renewal time
  • Seventeen (17) percent renewed flat
  • Forty-two (42) percent experienced an increase in total premiums at renewal time

Unfortunately, companies within the first three years of their IPO and companies in the biopharmaceutical sector (especially during Phase III clinical trials) typically have higher premiums.

According to Woodruff Sawyer’s Flash Report published in August 2015, IPOs experienced a higher rate of class action suits within the first three years due to a combination of increased scrutiny, strict liability for misrepresentations and omissions in registration statements (which leads to a lower bar to bring suit), and sometimes, being ill-prepared for a new level of scrutiny.

Not all insurance companies are willing to insure biopharmaceutical companies either, due to the increased risks associated with clinical trial failures. Well-run companies do a great job of disclosing their risks in Securities and Exchange Commission filings, but they often still get sued.

Regulatory and Litigation Trends That Can Impact D&O Coverage

It’s been a lively year for regulations and litigation trends. If you’ve been following my blog, here are just some of the topics that well-informed directors and officers have on their radar:

The Looking Ahead guide gives an overview of how these issues are impacting companies and their directors and officers. The guide also provides expert insights for the coming year from several Woodruff Sawyer leaders.

 

The views expressed in this blog are solely those of the author. This blog should not be taken as insurance or legal advice for your particular situation. Questions? Comments? Concerns? Email: phuskins@woodruffsawyer.com.

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All views expressed in this article are the author’s own and do not necessarily represent the position of Woodruff-Sawyer & Co.

Priya Cherian Huskins

Senior Vice President, Management Liability

Editor, Management Liability/D&O

Priya is a recognized expert and frequent speaker on D&O liability risk and its mitigation. In addition to consulting on D&O insurance, she counsels clients on corporate governance matters, including ways to reduce their exposure to shareholder lawsuits and regulatory investigations. Priya serves on the board of an S&P 500 public company and a large private company and has an impressive list of publications, speaking engagements, and awards for her influence and expertise in the industry. 

415.402.6527

LinkedIn

Priya Cherian Huskins

Senior Vice President, Management Liability

Editor, Management Liability/D&O

Priya is a recognized expert and frequent speaker on D&O liability risk and its mitigation. In addition to consulting on D&O insurance, she counsels clients on corporate governance matters, including ways to reduce their exposure to shareholder lawsuits and regulatory investigations. Priya serves on the board of an S&P 500 public company and a large private company and has an impressive list of publications, speaking engagements, and awards for her influence and expertise in the industry. 

415.402.6527

LinkedIn