D&O challenges mean difficult renewal conversations

Broker clients of Advisen, a collector of industry loss data, are reporting more difficult renewal conversations with their insureds on D&O, president Jeffrey Cohen told Monte Carlo Today.

“For some of the bigger, more difficult D&O renewals, they had conversations six months in advance with the chief financial officer or risk manager, when they said they should prepare for a 20 percent increase but now they are going back just before renewal and saying that it’s even greater than that,” he said.

Chief executive officer Ron Adiel noted that the D&O landscape is changing: claims can come from multiple sources, including cyber or sexual harassment cases.

“There are things that are not necessarily class action lawsuits they may be shareholder derivative lawsuits, or section 11 and Advisen has the data that sheds light on those things,” he said.

Advisen has the largest collection of industry loss data that focuses on actual events of severe large claims that can cripple an insurance company.

“Carriers come to us because they want to have a much better sense of the economic and financial losses and the attributes that drive them.

“They can have a sense of the underlying parameters that may influence the risk but they need to have a much better sense of the actual losses that can stem from each one of those attributes,” he said.

On the broker side, Advisen’s data is used to facilitate organic growth for brokers.
“When brokers go to their clients and prospects, they use Advisen’s data to educate themselves and the client,” said Adiel.

He added that from discussions with clients, there is a sense of the market being at an inflection point.

“The market is very volatile, it’s hardening in many lines of business,” he said.
“In cyber specifically there is a sense that premiums are not enough to cover the catastrophes that still may happen.

“The number one thing people are coming to Advisen for is to get a better sense of the underwriting, the pricing and the aggregation models they have,” he concluded.