The average price per million dollars in D&O insurance coverage increased 16.8% in the fourth quarter of 2021 compared with the pricing in Q4 2020, according to Aon's recently released D&O Pricing Index. The index showcases changes and developments in the areas of price, deductibles and litigation surrounding directors & officers insurance.
While the quarterly increase was notable, the average price change for primary policies renewing with the same limit and same deductible was 3.7% higher in Q4 2021 than in Q4 2020. In the area of renewals, 94.4% of primary policies renewed with the same limit, while a lower amount – 85.6% – renewed with the same deductible.
Aon's D&O price index for the fourth quarter of 2021 increased to 2.02 from 1.73 in the prior-year quarter, representing the 16th straight quarter of year-over-year price increases. While 74% of policies issued in the quarter saw premium increases, 15% renewed at the same rate and 11% renewed at a lower rate.
Q4 2021 saw 96.3% of primary policies renew with the same carrier. Primary policies that renewed with the same limit, deductible and carrier saw a 4.8% premium hike, indicating that shopping for a new carrier limited price increases.
Stanford Law School's Securities Class Action Clearinghouse broke down the number of new federal securities class action cases, with 56 filed in Q4 2021, compared with 48 in Q4 2020. The Stanford report also found 210 federal securities class action lawsuits were filed in 2021, a 34% decrease from the 319 in 2020. A recent report by Cornerstone Research attributed the decline in part to reductions in mergers and acquisitions. Because of a rise in special purpose acquisition company IPOs, however, the number of core filings with allegations related to SPACs was more than six times higher in 2021 than it was in 2020.