July/August 2020 Volume 31, Number 4 | |||||
D&O Policies and The CoronavirusEven before COVID-19, insurance for directors and officers (D&O) was experiencing a hard market. Premiums had increased 44 percent in the first quarter of 2020. Over the past few years there has been a steady increase in the number of lawsuits and the size of jury awards in cases involving D&O. And now with the coronavirus in full swing, triple digit increases are expected, according to a new report by insurance industry analysts at A.M. Best. Long Tail Problems
"It's likely that the COVID-19 pandemic will ultimately lead to greater complexity regarding emerging D&O claims and litigation issues," said David Blades, associate director, industry research and analytics at A.M. Best. "The inherent complexities of unique COVID-19 claim scenarios could lead to protracted litigation for many claims. … What that'll do is it'll cause the 2020 claims, and particularly 2020 D&O claims, to have an extraordinarily long tail. So that's something that we're looking at as things go forward," he said. D&O Policies Likely to Cover COVID-19 Triggers
Although policy wording regarding coverage for COVD-19-related events is controversial with respect to business interruption coverage, A.M. Best analyst Sridhar Manyem, director of industry research and analytics, seemed to minimize the problem in the case of D&O policies: Long Term Forecast The full A.M. Best Report, "Accelerating Trends, Unprecedented Turmoil Could Lead to Seismic Change for D&O Industry," foresees the upswing in D&O prices as reflected in these underlying conditions to continue for the next few years. |
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Most Business Policies Cover Riots, Vandalism and Civil Commotion Automated Driving Would Reduce Crashes by Only a Third D&O Policies and The Coronavirus
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