Lockton has shared its latest insights on the U.S. property and casualty insurance market, focusing on directors and officers (D&O) liability insurance. Their report shows that the market remains mostly favorable for buyers, especially for public companies, which saw a significant drop in insurance rates.
According to the Lockton Market Update, D&O insurance rates for public companies decreased by 9.5% in the fourth quarter of 2024. Despite this positive trend, Lockton notes that many insurers are experiencing “reduction fatigue,” meaning they may be hesitant to continue lowering rates further.
The report highlights that there is strong capacity for public D&O insurance. Insurers are eager to compete for business, but there is less pressure on existing insurers to drop their rates. Instead, they are likely to assess terms and conditions based on individual risks.
Looking ahead, the market remains cautiously optimistic about potential changes in federal regulations. Under President Trump, there has been a pause in enforcing the Foreign Corrupt Practices Act, which could lead to less regulation. However, this may also increase risks for companies operating internationally.
Lockton also points out that changing attitudes toward diversity, equity, and inclusion (DEI) could affect corporate governance and investment risks. Business leaders are facing a challenging landscape, with varying regulations at both federal and state levels. States led by Democrats are pushing back against some of the Trump administration’s policies, particularly concerning DEI and environmental, social, and governance (ESG) investing.
The report also mentions an increase in bankruptcies and securities class-action lawsuits in 2024 compared to the previous year. While some private and nonprofit D&O buyers might still secure lower rates upon renewal, Lockton warns that insurers believe rates have reached their lowest point.
As for employment practices liability insurance (EPLI), the market has also stabilized. Insurers are not withdrawing from this line of business, although one has stopped renewing standalone EPLI policies. There is still uncertainty around the Trump administration’s stance on DEI, which may lead to more regulatory scrutiny for employers.
Overall, the insurance market is showing signs of stability, but buyers should be aware that the trend of decreasing rates may be coming to an end. Insurers are now focused on maintaining their current rates as they enter 2025.