UK Directors' & Officers' Insurance Market 2024

Description

List of Tables

The report provides in-depth analysis of the UK directors' and officers' insurance market. It looks at market size as well as changes in premiums, claims, distribution, regulation, and future opportunities, including our proprietary GWP forecasts. The report uses results from our annual UK SME Insurance and UK Commercial Insurance Broker Surveys, as well as additional in-depth interviews with industry leaders.

UK directors' and officers' (D&O) insurance gross written premiums (GWP) continued to shrink in 2023. Over the last few years, conditions in the market have shifted. Competition and capacity have increased, as the market correction over 2019-21 improved profitability and the anticipated wave of COVID-19-related claims failed to materialize. As a result, premium rates have declined for large corporates, and softer market conditions are also in evidence for SMEs. However, falling prices are occurring during a period of significant economic headwinds, with growing risk exposures gathering on the horizon. These could have a significant impact on the future course of the market. Underwriters are therefore not expecting a return to lengthy soft market conditions, and prudence will ensure a return to growth by 2026.

Scope

The proportion of SMEs with D&O continues to gradually increase. GlobalData's 2023 UK SME Insurance Survey found that 39.9% of SMEs now have D&O (excluding sole traders), a figure that rises along with company size.
However, SMEs are re-evaluating their D&O holdings as a result of cost pressures; a quarter of medium-sized D&O policyholders and 20.8% of small companies are currently considering or have considered canceling their policy.
As competition and capacity return to the D&O market, switching levels have increased, rising to 13.3% in 2023. Meanwhile, the proportion of SMEs that renewed with their existing provider after comparing prices increased substantially (+5.9 percentage points [pp]) compared to during the hard market in 2021.

Reasons to Buy

Understand the current and forecast sizes and growths of the UK D&O insurance market
Gain insight into the impact of the softening market on SME switching and renewal behaviors
Discover the SME market shares of the leading UK D&O insurers and understand broker preferences
Learn about key distribution trends in the market

Product Code: GDFS0501IA

1. Executive Summary

1.1 Market overview
1.2 Key findings
1.3 Critical success factors

2. Market Dynamics

2.1 Soft market conditions have led to a drop in market size
UK D&O GWP has declined, but it remains significantly above historic levels
Market conditions have softened but differ by size of business
Caution is tempering underwriting approaches
2.2 D&O profitability was boosted by market correction, but the sector is facing uncertain headwinds
Profitability has improved, but uncertainties remain
Rising insolvencies are a primary concern
Regulatory and legal activity rebound following the pandemic
ESG, cyber risks, and data loss remain high on the agenda
2.3 The number of companies with D&O is growing, but cost pressures are impacting product holding
Penetration rates continue to gradually rise
SMEs are re-evaluating their insurance holdings amid rising cost pressures

3. Competitive Landscape

3.1 Appetite and capacity have returned to the D&O market
3.2 AXA remains the market leader for SME D&O cover
AXA's D&O market share is boosted by its Ageas renewal rights acquisition
Allianz has grown its regional hubs
3.3 AXA is the most favored insurer for D&O placement among brokers
AXA has focused on improving broker service and boosted its D&O proposition
RSA is targeting Profin growth
Fewer brokers are placing D&O business with more than one insurer

4. SME Purchasing Behavior

4.1 SME buying habits have been largely unaffected by changing market conditions
Brokers remain the dominant distribution channel for D&O due to the need for advice and recommendation
D&O is now offered by the vast majority of commercial brokers
The internet remains the most popular method, but the proportion going online has stagnated
Personal interactions retain a critical role
4.2 Switching has increased as competition returns
Almost four in 10 SMEs have been with their D&O provider for less than three years
Shopping around has risen among all sizes of SME
After price, the level of cover remains an important driver of switching
4.3 Legal services are the most sought-after added-value service

5. Future Dynamics

5.1 UK D&O market growth will be impacted by softening conditions
Market GWP will eventually resume slow growth to 2028
Premium rate movements and market conditions will continue to differ by sector
5.2 The evolving risk landscape will be under intense scrutiny
Economic indicators will be closely watched
Other factors that could impact D&O

6. Appendix

6.1 Abbreviations, acronyms, and initialisms
6.2 Methodology
GlobalData's 2023 UK SME Insurance Survey
GlobalData's UK Commercial Insurance Broker Survey
6.3 Definitions
SME
6.4 Secondary sources
6.5 Further reading
About GlobalData
Contact Us

Product Code: GDFS0501IA

List of Tables

Table 1: Impact of cost pressures on the D&O policyholding considerations of SMEs, 2023
Table 2: Method most recently used by SMEs to purchase D&O by size of SME, 2023
Table 3: Length of time SMEs have been with their D&O provider, 2023
Table 4: D&O switching levels and behavior at last renewal by size of SME, 2023
Table 5: UK D&O GWP, 2019-28f
Table 6: Economic indicators that will impact the future of the D&O market

List of Figures

Figure 1: D&O GWP is declining, following significant hard market growth
Figure 2: Marsh's insurance index reveals that UK D&O premium rates have declined since Q1 2022
Figure 3: Company insolvencies have risen substantially since 2021
Figure 4: Financial concerns are top of the agenda for UK SMEs
Figure 5: D&O penetration rises with company size, although there was a slight decline among medium-sized SMEs
Figure 6: Medium and small companies are most likely to be re-evaluating their D&O holdings as a result of cost pressures
Figure 7: AXA is the leading UK SME D&O insurer
Figure 8: AXA, Aviva, and Zurich lead the market across all sizes of SME
Figure 9: AXA leads the way for D&O among commercial brokers
Figure 10: Brokers are the main channel used by SMEs to purchase D&O
Figure 11: While the internet dominates for all SMEs, smaller SMEs are more likely to buy D&O following personal interaction than mid-sized companies
Figure 12: Almost four in 10 SMEs have been with their D&O provider for less than three years
Figure 13: D&O switching levels have increased among SMEs
Figure 14: Price, cover, and added risk management services are increasingly important drivers of switching for SMEs
Figure 15: A significant proportion of SMEs with D&O would like risk management services from their insurance provider but are not currently receiving them
Figure 16: Legal services are the most sought-after added-value service by SMEs with D&O
Figure 17: UK D&O GWP will stabilize to 2028

UK Directors' & Officers' Insurance Market 2024

Description

Table of Contents

List of Tables

Scope

Reasons to Buy

Table of Contents

Table of Contents

1. Executive Summary

2. Market Dynamics

3. Competitive Landscape

4. SME Purchasing Behavior

5. Future Dynamics

6. Appendix

List of Tables

List of Figures