Want to know more about what to expect in the insurance marketplace but don’t have time to read a 10+ page State of the Market? Interested in emerging trends and market or capacity changes? Gain the key marketplace insights you need at just a glance with our easy-to-read 2025 guides.
ARCHITECTS + ENGINEERS
2025 will be very similar to 2024. The marketplace remains stable, with a slight slowdown in submission volume. There is still a large appetite for artisan contractors. Capacity is readily available as the product line is experiencing a softer cycle. Rates are flattening out a bit as A&E pricing lags behind some other lines of business that are also softening. However, certain disciplines remain harder, and some carriers are still adjusting rates to align with the marketplace better. Rate increases of 3% - 12% are expected on larger accounts in certain jurisdictions such as New York, California, and Florida or difficult classes including Geotech, Structural, or Soil. Revenue growth results in premium increases in regions where construction is still booming. Accounts with a higher concentration of residential work, especially on condominiums, remain challenging as condo claims continue to be problematic for most insurers. In many situations, clients dabbling in these projects have decided to walk away for insurance reasons. Some insurers are non-renewing accounts, primarily due to claims. A short list of insurance companies have completely exited this class within the last few months, and a similar number have entered the space. Newer markets generally do not target the problematic accounts that result in the exit of other insurers.
A few new markets have been entering the A&E space, mostly MGAs with Lloyd’s backing looking for small, clean business. These are not market-changing players, but it has added some capacity. On smaller, clean business, competition is greater, and rates are expected to remain flat or rise up to 5%, while mid-market business rates will increase by 3% - 8%. A few A&E markets are carefully adding coverage enhancements to their policies. Insureds are becoming more diverse, leading to more marketplace questions and decreased competition in some limited scenarios.
CANNABIS
The cannabis market for D&O is very similar to private D&O. It is softer for clean accounts; however, larger or more complex accounts tend to be more challenging. Clean accounts with good financials are seeing the removal of cannabis exclusions and the addition of regulatory coverage and other enhancements. The markets willing to consider cannabis accounts are still very limited. Regarding cyber, the prices are a bit higher, and markets are still limited. Select markets are available for E&O coverage, but the E&O market remains soft, much like the other miscellaneous professional lines.
CRIME
From a management liability perspective, business typically stays in the standard market. The market remains soft with substantial capacity unless an account includes significant cyber exposures. Market stability means prices are mainly flat. Standalone social engineering or excess coverage is now more readily available. Coordination with the Cyber Crime policy for Social Engineering/Deception coverage is necessary.
D&O: DESPAC + SPAC
SPAC activity did tick up at the end of Q3 2024, and that momentum grew through the end of 2024. Due to the administration change, we will likely see an increase in DeSPAC/SPAC activity in 2025. Premiums are expected to decrease, with a few markets pushing to keep rates flat, with profitability remaining a key factor. See the D&O: Public segment below for additional commentary.
D&O: PRIVATE/NON-PROFIT
The soft market continues, and capacity is abundant due to new marketplace entrants, including MGAs and insurtech facilities. Many senior underwriters are transitioning from traditional insurance companies and entering underwriting facilities. Most accounts are coming in flat, with some seeing up to 10% reductions. Competition is greater among insurers seeking growth, resulting in greater underwriting and coverage negotiation flexibility. The soft market is a great time to work on broadening terms and conditions, such as removing anti-trust exclusions, increasing derivative sublimits, including books & records coverage, or requesting carve-backs to many of the standard exclusions, etc. It is also an opportune time to educate insureds on the benefits of Side A DIC policies because pricing is very favorable.
D&O: PUBLIC
Throughout the soft market of the past 2-3 years, virtually all D&O programs returned to or improved on their pre-2019 - 2021 hard market premiums and retentions. 2024 continued to provide some premium relief to most programs, which is expected to continue into 2025. Most insureds will see flat to low single-digit premium reductions on primary coverage, and most excess carriers are expected to follow. Competition for excess layers remains fierce. Depending on how much rate has already been taken out of a program, expectations are for excess to stay soft. Record capacity remains the primary driver for the soft market, and carriers are aware that failing to compete means they will likely be replaced. A few markets have been drawing the line on the minimum price per million for large market cap or troubled accounts. Generally, the smaller players whose books cannot sustain multiple limit losses take this approach. As always, there will be some exceptions to the rule, where companies coming off their IPO/De-SPAC increased risk windows will still have more significant decreases in retentions and premiums to look forward to if they haven’t already.
While there is no anticipation of a market shift, underwriters now express rising caution about further rate decreases. Thus far, actions speak louder than words. Profitability remains the “elephant in the room” for carriers, especially the smaller and newer market entrants in this space with the rate deterioration environment. The number of securities class action (SCA) claims has continued to trend modestly upwards over the past few years. Due to the long tail on D&O claims, loss development for many of these claims will not be seen for 2-3 years. Looking ahead to risk factors for the D&O market, other than insufficient rates, uncertainty remains as a result of the impact of the following:
- The foreseeable deregulation coming with the new administration;
- Stock market valuations and corresponding company market capitalizations at all-time highs increase probable settlement sizes;
- A needed rebound in the IPO market;
- An increase in backlash DEI and ESG claims;
- The increased use of artificial intelligence: While there are no immediate plans to regulate AI, it will likely happen in the future.
Lastly, too many programs are sold on price and retention, particularly in the small to middle-market capitalization space. The need for a qualified broker specializing in public D&O is imperative to craft the broadest coverage available, especially in a highly competitive marketplace.
ENERGY
The energy sector continues to offer stability overall, particularly for preferred clients, while it presents challenges for smaller, less desirable placements.
As a commodity, energy remains a solid sector for insurers. Most energy entities, especially exploration and production (E&P) companies, are doing well. Investors are more attuned to the fact that the price of oil can rise and fall based on demand and other factors. However, the more financially leveraged an energy company is, the more complex a risk can be to place.
Overall, the professional lines market remains soft across the energy industry, and directors and officers (D&O) coverage remains particularly soft. The cyber market for the energy industry is shaping up similarly to the D&O market. Claims are generally unrelated to the volatility of oil prices. There is an abundance of cyber carriers writing energy. However, it’s still critical that all proper controls, such as multifactor authentication (MFA) and endpoint detection and response (EDR), be in place.
Some insurers continue to take a tough stance on energy based on environmental, social, and governance (ESG) guidelines. For example, coal is challenging and has far fewer coverage options. Many carriers are adopting supportive rather than exclusionary approaches to those transitioning toward newer energy technologies and addressing emerging risks associated with transitioning to options like carbon capture and storage or hydrogen. Outside of accounts that represent ESG concerns, multiple carriers and plenty of capacity are available.
E&O
While Management Liability pricing remained flat to below expiring in 2024, MPL pricing saw marginal increases on most MPL accounts (i.e., not Lawyers or A&E). Additional price increases are not likely in 2025. There is substantial capacity available in both the standard and non-standard markets. MGA entrants to MPL continue to disrupt rate increases. E&S volume has dropped, but when handling more defined professional business such as lawyers, insurance agents, accountants, etc. more professionals are purchasing E&O or Miscellaneous Professional Liability, whether by choice or because client contracts often require it. Available capacity depends on the size of the account. Most insurers on this line have greater flexibility on accepted classes and terms/conditions.
EPL
The EPL market typically follows private/nonprofit D&O, as the coverages are often written together. The soft market continues, and capacity is abundant due to new marketplace entrants, including MGAs and insurtech facilities. EPL pricing is expected to continue to be flat to under-expiring into 2025. It is a good time to work on lowering retentions as many carriers seek to be aggressive to win new business. There is increased competition among insurers seeking growth. Wage & Hour defense and other supplemental coverages are available in most states, but are sublimited in California.
FIDUCIARY LIABILITY
Capacity is readily available, and opportunities exist around more unique accounts. 2024 saw an uptick in submissions and more businesses converting to ESOPs. More straightforward accounts remain in the standard market; many retailers write it directly. The pricing in the marketplace has been flat to declining as more markets are interested in writing Fiduciary Liability policies, and excessive fee litigation has slowed since hitting a high point in 2022. Retentions are higher and remain the focus of underwriters, especially regarding specific plan asset sizes (Defined Contribution Plans above $250M in assets) and exposures (excessive fees). Carriers have not restricted coverage; however, limits above $5M from a single carrier are challenging. Tougher classes include healthcare, financial institutions, and schools/universities.
FINANCIAL INSTITUTIONS
There continues to be limited capacity for lead financial institution professional liability placements, especially for challenging classes (i.e., depositories, insurance carriers, specialty lending institutions, and broker-dealers). Increased capacity for real estate investment risks and asset managers offset this. However, some underwriters are looking at investment portfolios and shy away from cannabis, adult content, cryptocurrencies, and firearm investments. There is an expectation for increased merger/ acquisition activity in the private equity and venture capital marketplace. Pricing remains largely stable, and rates are generally flat. Some accounts have seen slight decreases to flat renewal premiums, which is expected to continue into 2025.
Smaller investment advisors will find a softer market, with much of the business written directly in the standard market. Opportunities in the quasi-FI space continue to expand. Non-traditional lending and other classes with FI-type exposure that are smaller in size continue to be opportunities due to the limited number of insurers and wide range of pricing dependent on underwriter discretion.
PUBLIC ENTITY + EDUCATION
With the challenges faced in the broader public sector and education space, professional lines and cyber are two areas that are seeing significant developments. For cyber, while the class is still considered a higher hazard, the recent hard market resulted in many Public Entities, Schools, and Universities dramatically improving their controls, making them more attractive to carriers. When combined with the softening cyber market, insureds have significantly more options than in the past years and are seeing improvements in pricing and terms. The best results have been found with carriers with a focus and expertise in the class, particularly for insureds looking for a long-term partner. Pricing for these lines tends to be flat with decreases of 10% - 20% where there is significant competition.
While losses remain challenging for public officials, educators, school board legal, and employment practices, these coverages are often a smaller share of the total package premium and, when placed as such, are generally following the pricing for the AL, GL, LEL, and other lines placed together. There has been a significant increase in the number of markets willing to consider these lines on a monoline basis, and this new capacity is allowing for increased creativity in program structure. Pricing for these lines has seen renewal rates between 0-10%.
Capacity remains scarce for Mono-line Law Enforcement Liability, and much of the new capacity in other parts of the space remains wary of this exposure. There will continue to be many good opportunities for this coverage; however, its pricing will remain firm due to the limited available capacity.