The State of D&O Insurance in South Africa

Angela Jack, Business Unit Head: Financial Services Group at Aon South Africa

Company Directors and Officers (D&O) are facing unprecedented times.

Not only are they having to manage a whirlwind of change and disruption in their business models as factors such as technology, changing buyer behaviours, socio-demographic shifts, climate change and pandemics exert their influence, but they’re also being confronted by the global spread of a highly litigious culture.

Increased pricing, reduced reinsurance capacity and restrictions in the scope of cover have created significant challenges in the global Directors and Officers (D&O) liability market, and South Africa is no exception. A combination of inadequate ratings with larger almost ‘catastrophe-like’ settlements being seen in an overall deteriorating claims environment, has meant that insurers have been feeling the pressure at both ends of the business.

The inevitable consequence is a drive by insurers to price risk differently to allow for the increased frequency and size of their D&O related losses – losses not previously contemplated in their rating models. It’s one reason why we have seen a hike in pricing – by as much as 50% or more in some instances and lines – as well as restrictions in cover and even markets withdrawing from certain industry sectors as appetites wane.

Click here to read more...