By Isha Marathe

May 16 - (The Insurer) - The executive lines insurance market is favorable for policyholders in 2025 as new entrants in cyber and technology errors and omissions, and general miscellaneous professional lines, push premiums down, wholesaler Risk Placement Services has said.

In a new management and professional liability market outlook report, RPS said an area where the soft market is especially felt is in private company D&O, and both the private and public D&O markets continue to see competition on most renewals.

"We're still in a very soft market," said RPS area senior vice president Bryan Dobes, who expects the softening to continue in most areas, barring industries such as entertainment, gambling and crypto.

"We've seen a few carriers exit and there are rumblings of more to come, but despite that, the sheer amount of capacity in the market continues to push price downwards."

Average percentage decreases were in the teens in the first half of 2024 for public D&O, and came down to single digits in the fourth quarter of the year, according to RPS, which expects that downward trend to continue throughout 2025.

KEY DRIVERS DRAWING ENTRANTS

The claims environment has remained relatively stable, with securities litigation activity in 2024 not dramatically different from the prior year.

Additionally, increasing capacity from tech-driven MGAs is leading to an uptick in competition in the mid-market as they begin to extend their appetite beyond the smaller businesses they have traditionally served.

"These carriers are extending their appetite as they recognize the need to bind more premium and see a favorable claims environment," Dobes said.

"Whereas an account with 500 employees and $300 million in revenue would have traditionally gone to a standard carrier, we now have five to 10 additional options.

"These new carriers are built for speed, bypassing some of the historical underwriting processes, which is increasing competition and continuing to push pricing down."

Separately, carriers that had pulled back in the cyber market are now reconsidering their positions, drawn in by a need for top-line growth.

"We are seeing some carriers return to some classes of business they may have pulled out of in the past – like schools or manufacturing – and we also saw some entirely new entrants enter into the market last year," said Tim Foody, RPS executive lines leader.

As a result of the saturated market and extensive options, brokers and insureds have to be more discerning about choosing the right carrier, and executing a well-negotiated coverage form, Dobes said.

CLOSER UNDERWRITING SCRUTINY

While new entrants may have come back to executive lines within cyber, realizing that the claims environment was not as severe as initially anticipated, RPS said that the sector is hardly benign.

There were a record number of ransomware attacks in December 2024, signaling that ransomware is once again becoming an issue.

"I expect underwriters to place greater emphasis on critical vendor management, with more questions around supplier security in the coming year," Foody said.

Similarly, the difficult claims environment in the architects and engineers market means the soft market is not as clear-cut as other sectors in the line, with most rates likely to remain flat at renewal, RPS found.

While the volume of claims has remained steady, the rising costs associated with those claims complicate the market, RPS said.

Social and economic inflation are driving up legal and material costs. Additionally, the California wildfires are likely to intensify competition for raw materials to rebuild.

"(You) may start to think that we are poised for an increase in pricing, but that has not happened yet," said Ron Kiefer, RPS area executive vice president.

"From a market pricing perspective, it remains fairly flat for now."