The COVID-19 pandemic has created unprecedented challenges for policyholders renewing all lines of property and casualty insurance. Directors and Officers Liability (D&O) renewals were already difficult at the start of the year, as the market has been hardening since 2018 due to an increase in claim frequency and severity. These developments have caused insurance carriers to pull back capacity and reconsider insuring policyholders with poor claims histories.  Companies purchasing D&O coverage currently may anticipate double-digit increases in premium throughout their tower, and renewal packages with exclusions that may severely curtail the coverage being provided. In these times of increased risk to directors and officers, businesses should understand the current trends in the marketplace and the practical steps they can take to best position themselves for a successful renewal.

D&O insurance protects public corporations against securities claims and the costs of indemnifying directors and officers for liabilities that they may incur as a result of their service. Private company D&O insurance provides broader corporate coverage, which, subject to its exclusions, may insure a broader range of risks. And of course a key function of D&O insurance is to provide personal asset protection to directors and officers in situations where a company is unwilling or unable to indemnify against a liability claim. Over the greater part of the last decade, businesses seeking D&O coverage benefited from a soft market with the option to choose from multiple different carriers offering expanding coverage and decreasing premiums. An increase in regulatory investigations and securities litigation, coupled with the effect of emerging risks related to environmental issues and cyber vulnerabilities, as well as other event-driven liabilities, have caused capacity in the D&O market to shrink.