State of the Insurance Market Report
2025 Initial Outlook and 2024 Wrap-Up
Management Liability
Litigation against corporate leaders has continued throughout the first half of 2024, driving greater demand for strong directors and officers (D&O) coverage. Businesses and executives need more comprehensive protection now due to:
- Regulatory scrutiny
- High-interest rate environment
- Political/economic uncertainty amidst a highly contentious election year
- Shareholder activism
- Securities Class Action lawsuits are on the rise in 2023 after a three-year period of consecutive declines
- Emerging risks like cyber incidents
- Intensified environmental issues
- Increased bankruptcy filings
- Banking Industry turbulence
Additionally, the Securities and Exchange Commission (SEC) introduced new regulations affecting the financial market and burdening companies and their directors and officers with the cost of compliance. The commission is focusing particularly on D&O and the management of large debt, which could lead to bankruptcies that might impact local and global market volatility.
Coverage Considerations
The management liability insurance market remains soft coming out of a hard market phase. Rates may be challenged in the second half of 2024; particularly for clients with real estate exposures and hospitality/retail exposures (both of which have been challenged post-pandemic). Still, this market makes for a favorable period for coverage renewal or purchase, as new market entrants continue to drive down rates and expand coverage terms. This, coupled with more traditional carriers focusing on retaining renewals they deem profitable, makes for a continued buyer’s market.
Pay special attention to new SEC regulations for the balance of 2024. These will affect both management liability and cyber insurance. By focusing on compliance, you’ll avoid legal and financial ramifications. Another focus area is the return-to-office mandates by employers, which seem to be gaining more momentum in 2024. This could have significant implications from the D&O and employment practices liability (EPL) perspective.
The government has increased its focus on environmental, social, and governance (ESG) practices. Insurers are scrutinizing companies' risk management practices and governance structures more closely before extending coverage. Review policies, identify conflicts of interest, and ensure transparent disclosure to stay abreast of regulatory challenges.
Business leaders need to monitor the fast-changing landscape of cryptocurrency and digital assets. Regularly evaluate these assets through the lens of both cyber and management liability — especially when engaging with third-party providers.
Management Liability Rate Forecast |
||
| Private Company - Primary: |  |
-5% to -15% |
| Private Company - Excess: | |
-10% to -30% |
| Public Company - Primary: | |
-10% to Flat |
| Public Company - Excess: | |
-10% to -30% |
| Financial Institutions - Primary: | |
-5% to Flat |
| Financial Institutions - Excess: | |
-5% to -15% |
| Employment Practices - Primary: | |
-10% to Flat |
| Employment Practices - Excess: | |
-10% to -20% |
| Fiduciary Liability - Primary: | |
-10% to Flat |
| Fiduciary Liability - Excess: | |
-10% to -20% |
Take the initiative to understand your insurance requirements, regularly assess your risks, and maintain open and transparent communication with insurers and brokers.
Doing so will help you stay ahead of potential issues and position yourself well in the insurance market.
Leverage favorable market conditions with stable rates and increased capacity.
Consider adding additional limits to your coverage or diversifying your insurance carriers. These moves can provide added protection in case of unexpected cyber threats or management liability issues.
Adhere to regulations by prioritizing compliance with new SEC regulations, especially regarding cybersecurity disclosures and fair valuation practices.
Investing in robust risk management strategies and controls can lead to better insurance terms and conditions.
Fortify cyber protection since small and mid-market companies are prime targets for cyberattacks.
Criminals assume these organizations have fewer cyber controls. Bolster cybersecurity measures to help defend against threat actors.
Stay current by keeping informed of industry trends, emerging risks, and regulatory changes to help you make informed decisions about your insurance coverage and risk management strategies.
Small to Fortune 500 businesses, publicly traded companies (including IPOs), private organizations, and not-for-profits choose us to protect them from incidents that could severely impact the success of their business.
Download the Report
Our industry and product line specialists have collaborated to provide an update on current trends and market conditions. We invite you to explore their insights by downloading our latest State of the Insurance Market Report.