Wednesday, 21 May 2008

How big is the Global D&O Market?

For a number of reasons there isn't a precise number for the total value of premiums on Directors & Officers insurance. For one, every company reports using a different nomenclature or taxonomy for their coverages.

Advisen estimates total global D&O premiums at around $10.5B.

Of this the total U.S. D&O premium is $6.25B of which $4.25B is public company D&O premium, and $2B private company D&O premium.

Our methodology for this figure is based on
(a) Advisen's benchmark databases (the largest online database) where the D&O premium is adjusted by the relative market share of our database participants
(b) estimates of D&O premium as a percentage of total reported Other Liability – Claims Made premium, and
(c) input from a number of large D&O writers as concerns their D&O premium volume and their estimates of their total market share

The figure is important as a reference for what happens when subprime claims hit the market. Advisen's February 2008 estimate of $3.6b in insurable D&O loss will be revised upwards in a soon-to-be-released report (including Errors & Omissions loss estimates), but the single-year impact will not approach total premiums.

The impact will hit the financial institution carriers hard and the resulting ripple effect will be very significant in the D&O space, but is not enough to put the whole market underwater. Let me know if you want to be on the list when the report is announced.

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