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Why are Directors & Officers Insurance Rates Rising? - YouTube
Channel: Rogue Risk
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what do we need to know about rising
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directors and officers insurance rates
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and how can you make sure that you're
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keeping the right coverage at the most
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competitive price we're going to talk
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about it today here we go
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hi ryan hanley here founder and
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president of rogue risk where we do
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insurance differently specifically by
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giving you knowledge and information to
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make the right insurance decision if you
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find this content valuable and you're
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watching on youtube please tap that like
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button for us that just helps other
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business owners business leaders like
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yourself find this content if you think
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it's valuable okay great so here we go
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directors and officers insurance well
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the good news is
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while rates are still going up and that
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is due to mostly the macro economy and
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the general
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um just rising of rates across the board
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the the continuing increase in um
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judgments and payouts from lawsuits uh
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the good news is rates have slowed so
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while in the third quarter and fourth
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quarter of 2022 respectively we saw ten
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and six percent increases overall in
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directors and officers insurance in the
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first quarter of 2022 we've only seen a
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three percent increase overall in
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directors and officer insurance this is
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a very good sign there are a couple of
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reasons for this the primary reason is a
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lot more uh companies are starting to
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dip their toes into the dno space which
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means there's more capacity there's more
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options and when there's more options
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more capacity in the market rates come
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down that's a good thing
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what you need to be careful for careful
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with there is that new entrants to a
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market don't always have the best
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coverage so if you're switching from a
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tried and true directors and officers
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insurance carrier uh to someone who
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maybe is new to the space it is
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important that you're working with a
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broker who can kind of read through the
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policy language and make sure you are
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still getting the proper coverage for
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your business remember the reason
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directors and officers insurance is so
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important is because executives and
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board members
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are putting their personal assets at
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risk by taking those leadership
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positions and directors and officers
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insurance protects your executives and
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board members personal assets in the
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event that they are named in a claim
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regarding the business so for all those
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reasons director's office is very
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important it's a very good sign that in
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general the market is
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seemingly stabilizing after a few years
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of very high rate increases it seems
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like those rates are starting to steady
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it's nice to see that there's additional
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capacity in the market more options more
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availability to directors and officers
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insurance especially downstream small
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private company directors and officers
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insurance is a fairly inexpensive
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product we're looking at you know
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anywhere from 900 to 1500 bucks a year
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to get a million dollars in directors
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and officers insurance for a low-risk
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private kind of small business so that's
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a good thing
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uh that all being said there are a few
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things that we need to consider
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cyber security and cyber related risks
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are a major major concern for directors
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and officers
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if there's a cyber related claim
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uncovered cyber related claims
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and or inadequately covered cyber claims
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can come back to your directors and
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officers insurance the other big one is
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esg or environmental social and
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governance related um issues um this is
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a big
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push in our current ecosystem uh the
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legitimacy of which is in question in
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terms of should you take what's being
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pushed out through esg papers and white
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papers and actually use it in good
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business practice or is it something to
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just use as a filter of sorts as you're
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making decisions something to keep in
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your mind right obviously the
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environment our social economy and and
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how we govern and relate to each other
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is very important but to we've seen over
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time that esg related businesses uh
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particularly if you're running your
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business off an esg percentage score
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tend to perform very badly in the long
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term in terms of profitability so just
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be careful but understand that depending
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on what state in your municipality
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you're in what what you know and what
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goes on uh in the u.s in general there
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could be regulations there could be
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downstream pressure push down from
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politicians uh related to esg onto your
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business and if you don't have the right
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coverages in place if you're not taking
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the right precautions as are mandated to
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your business um you could be in trouble
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so it is in
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i foresee or you know i'm not the only
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one that esg related um
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governance esg related issues esg
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related regulations are going to
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provide pressure on pricing and push
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rates back up
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unfortunately our politicians do not
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care about
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the pressures that are put on small
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business from a financial and margin
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related standpoint and therefore they
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shove down regulations like esg onto
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small businesses and
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when those
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issues create claims that then can be
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adjudicated against and there are
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lawsuits rates go up so all that being
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said it is important to understand that
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while it is very good that directors and
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officers insurance rates have steadied
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and if you feel like you're paying too
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much or you've seen larger increases
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year over year and you don't have a high
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exposure it may be time to look for
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another carrier work with a trusted
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broker to get that done um but
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ultimately we want to keep our head up
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around the issues of cyber security and
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esg as they could potentially push rates
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back up okay if this is the kind of
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relationship you'd like to have with
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your agent broker we would love to work
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with you the best way to get a hold of
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us is by phone 518-960-6
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we work in all 50 states so wherever you
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are we can come to you you can also
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email us at gorogue rogers.com you can
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visit us online at rogris.com or i'm
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sure there is a button or link somewhere
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around this video which will let you
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contact us whichever way you choose we
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look forward to working with you
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