CRC REDY: broadly soft conditions continue for private D&O, E&O, EPL and cyber

By David Bull

July 17 - (The Insurer) - Soft or softening conditions observed across the private D&O, E&O, EPL and cyber markets during the second quarter are largely expected to remain in place through the remainder of the year, according to CRC Group.

The wholesaler’s latest REDY index for private D&O showed average renewal price reductions of 1.7% in April, 0.2% in May and 0.4% in June.

In commentary, the intermediary said the private D&O market remains soft heading into the second half of 2025, with most accounts experiencing flat renewals or modest rate reductions of between 3% and 4%, with higher reductions on excess placements.

“Capacity continues to be abundant, fuelled by an influx of new MGAs and insurtech underwriting facilities, many of which are staffed by seasoned underwriters who have moved on from traditional carriers,” said CRC.

It added that incumbent carriers are being more aggressive in the private D&O segment because of the heightened level of public D&O price softening, with competition most intense on excess layers.

“This market phase presents an ideal opportunity to negotiate broader terms and conditions. Brokers are having success pushing for the removal of antitrust exclusions, increased derivative investigation limits, broader books and records coverage, lower retentions on the regulatory coverage for healthcare accounts, and carve-backs to standard exclusions.

“It is also an excellent time to position Side A DIC coverage, as pricing remains favourable and awareness of the need for strong personal asset protection continues to grow,” said the company.

Conditions for buyers remain attractive despite macroeconomic pressures creating new underwriting concerns, including the potential for supply chain disruptions and increases in the costs of goods sold due to escalating tariffs.

“This could lead to revenue growth that does not reflect real financial strength, prompting underwriters to adjust pricing. Brokers should focus on demonstrating stable operating income and margins to mitigate any perception of artificially inflated exposures,” said CRC.

Areas being scrutinised by underwriters include financial statements amid an uptick in Chapter 11 and Chapter 7 filings, as well as the emerging risks posed by artificial intelligence.

COMPETITION DRIVING DOWN E&O RATES

The REDY index for E&O showed average price reductions of 0.2% in April, with modest increases of 1.2% in May and 2.4% in June – albeit still down from the increases seen over the previous four quarters.

CRC said the miscellaneous professional liability market remained soft in the second quarter “with abundant capacity across both standard and non-standard markets”.

It noted that new entrants, including wholesale-only facilities, are driving down rates. Most underwriters are prioritising retention over rate, it added.

E&O market conditions for architects and engineers continued to soften, also driven by increased capacity and “aggressive quoting, especially from wholesale-only MGAs”.

“Rate reductions are common as underwriters focus on retaining business, often at lower premiums,” said the broker.

Lawyers’ E&O pricing has stabilised against a backdrop of low submission volume, with underwriters flexible on acceptable practice areas but sensitive to application changes, while carriers are also cautious on solo practitioners and small firms.

In real estate, new entrants to the real estate developer space are driving lower minimum premiums and broader accessibility, said CRC.

“Competitive pressure remains high, especially on larger insureds, creating a favourable environment for brokers to push for improved pricing and terms,” it commented.

EPL REMAINS SOFT

EPL pricing was up 0.3% on average for renewals in April but fell by 0.2% and 0.7% in May and June, respectively. CRC said these soft conditions are expected to continue into the second half of 2025, again driven by new entrants, especially MGAs and insurtech platforms.

“However, beneath the surface, the line is facing growing social and political headwinds. A cultural shift toward increased accountability in the workplace is clashing with a wave of corporate pullbacks from ESG and DEI initiatives.

“Companies are quietly eliminating roles, scaling back programs, and reshaping their messaging, which is creating a breeding ground for employee dissatisfaction. This environment is expected to lead to a rise in discrimination, retaliation, and wrongful termination claims in 2025 and beyond,” said the broker in commentary.

It added that while rates remain competitive on clean risks, underwriters are starting to raise retentions across the board, including the use of separate class action or jurisdiction-specific retentions for California, New York and higher earners.

“Overall, EPL coverage remains widely available, and most carriers are not pulling back on capacity. However, underwriters are laser-focused on emerging issues including pay equity, employee privacy, ESG-related disclosures, and sexual harassment claims – particularly in light of social inflation and the potential for large settlements or class actions,” said CRC.

CYBER CAPACITY CONTINUES TO ENTER MARKET

In cyber, flat to softening conditions persisted in the quarter, with pricing up 0.9% on average in April, down by 0.3% in May and up 1.2% in June.

CRC said that cyber excess factors are decreasing by 5% or more on average as additional capacity enters the market.

Coverage options are broadening too, with social engineering, invoice manipulation and other related cybercrime insurance becoming more widely available at full policy limits, the broker reported.

Despite rising claim frequency, wrongful collection coverage continues to become more negotiable in the market, said CRC.

And it added that claims frequency in cyber is still not directly correlating to rate increases.

“Clients who have made the adequate post incident investments are being afforded competitive terms at renewal. Product creativity continues to sit at the forefront for CRC brokers in these market conditions,” it concluded.