Risk-Adjusted Benchmarking: D&O Rates Fall in Second Quarter

Publicly traded clients in the US that renewed in the second quarter of 2013 saw risk-adjusted primary directors and officers liability insurance rates fall on average 0.97%.

Under a traditional analysis — without modification for changes to risk profiles that are key to a risk-adjusted view — average primary D&O rates increased 4.9%, with a median increase of 5%.

For publicly traded clients in the US that renewed in the second quarter of 2013, risk-adjusted primary directors and officers (D&O) liability insurance rates were down on average 0.97%, with a median decrease of 4.43%.

About Risk Adjusted Benchmarking

Marsh Global Analytics’ risk-adjusted benchmarking normalizes rates for program structure changes (retention and/ or limits) as well as changes in exposures related to market capitalization, stock performance, valuations, balance sheets, and other factors. In the second quarter of 2013, changes in market capitalization were a major factor in the calculation of risk-adjusted rates. Compared with a traditional benchmarking approach, which analyzes only similar programs, the risk-adjusted methodology provides an expanded sample set and a granular view of market trends.