Aon | Financial Services Group
Back to FSG Quick Insights | Subscribe to FSG Quick Insights >>
Like other D&O markets, Bermuda experienced a move from price increases to decreases in Q2 2022. For firms in the commercial sector with positive risk characteristics this trend was accelerating through the latter part of the year.
The launching of new insurers or platforms of established insurers over the past 24 months has resulted in Bermuda currently having a potential total of 19 market participants. This record level, while contributing to improved premium levels for firms based upon simple supply and demand, has also increased the stability of the Bermuda market.
This increased number of Bermuda insurers also assisted in developing a greater market appetite for emerging or more challenging areas of risk transfer. Previously renowned as a lead DIC or excess D&O market for F500 clients, Bermuda can now offer niche primary terms on ABC placements for digital asset companies and other hard-to-place business, alongside the more traditional Side A products where Bermuda is recognized as market-leading.
Bermuda is also a major participant within the Employment Practices Liability and Wage & Hour sectors, illustrated by the fact that it is the only market of size and substance for the Wage & Hour product. Adverse claims development arising from these coverages has resulted in premium increases trending upwards in the 5% to 10% range by the end of 2022, simultaneously necessitating some primary and low excess carriers to re-evaluate limits offered. The ever-changing claims landscape has resulted in a robust set of questions from underwriters. Retentions have also been pushed upwards where underwriters feel more exposed.
Aside from the traditional products referenced above, certain Bermuda carriers also provide significant and valuable management liability capacity across the Private Equity, Hedge/Asset Management and Insurance Company disciplines, often with a blended structure encompassing multiple lines.
Expectations for the 2023 D&O market from several Bermuda sources range from stabilization to continued downwards pricing pressure, although the reality will likely be somewhere in between. Importantly and of benefit to buyers, there have been no voiced concerns around breadth of coverage or available limits of liability. As a result, the surplus supply in the commercial section will likely result in continued premium decreases, albeit perhaps not so severe as in the past.
One key factor to watch in 2023 will be the behavior of the major global primary D&O markets. The C-suite level of certain key insurers have indicated a concern that too much D&O rate was given back far too quickly in the past 24 months. Whether or not this influences their premium outlook remains to be seen, although any wholesale adjustment of primary pricing will likely also impact the views of excess insurers, including those in Bermuda.
Read more about management liability marketplace trends as we head to 2023 here.
Aon is not a law firm or accounting firm and does not provide legal, financial or tax advice. Any commentary provided is based solely on Aon’s experience as insurance practitioners. We recommend that you consult with your own legal, financial and/or tax advisors on any commentary provided by Aon. The information contained in this document and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity.