Skip to main content
main content, press tab to continue
Survey Report

Insurance Marketplace Realities 2023 - Financial institutions — FINEX

December 1, 2022

Competition among insurers has increased across all lines for financial institutions, resulting in a deceleration of rate increases and, in some coverages, rate decreases.
Financial, Executive and Professional Risks (FINEX)
Rate predictions: Financial institutions – FINEX
Trend Range
D&O — Publicly traded financial institutions; Primary Neutral increase -5% to +2.5%
D&O — Publicly traded financial institutions; Excess/Side A Increase (Purple triangle pointing up) -15% to flat
D&O — Private financial institutions Neutral increase -10% to +2.5%
D&O/E&O — Asset managers (excluding private equity/general partnership liability) Neutral increase -10% to flat
Bankers professional liability (BPL) Increase (Purple triangle pointing up) Flat to +7.5%
Insurance company professional liability (ICPL) Increase (Purple triangle pointing up) Flat to +10%

Market conditions are softening, which will likely continue through the first half of 2023, with potentially some flattening out in Q2 2023.

  • The influx of new capacity, strong growth targets for both new markets and established insurers, and the lack of IPO and SPAC activity have contributed to the increased competition in the marketplace. Most insurers headed into 2022 with positive rate targets, but the competition accelerated on the late Q2 2022 renewals, likely as insurers assessed their first-half performance against annual targets.
  • While most insurers are supporting flat rates and/or rate decreases, some are stepping away from programs where the rates no longer make sense. There is a general concern that the softening in rates with a potential recession in 2023 will result in inadequately priced business, which is what insurers have focused on remediating over the past couple of years.
  • New market entrants entered the marketplace deploying excess capacity, but some have now issued primary forms with the goal of writing primary and being viewed more favorably for an excess attachment because of their primary capabilities.
  • Financial institutions continue to explore the use (or expanded use) of captives, alternative program structures, self-insurance and risk financing portfolio analytics to better manage program volatility.
  • Key emerging risk trends that are top of mind for financial institutions include economic uncertainty, ESG (with an emphasis on climate, inclusion and diversity), digital assets and cybersecurity threats. Driving economic uncertainty are interest rate hikes, high inflation, anticipated hard landing for the economy, market volatility and geopolitical risks. Financial institutions are positioning their businesses and portfolios to ensure that they can weather continued volatility and a downturn in the economy.

Financial institution D&O rates are trending downward with primary rates at flat-to-low single digit decreases, and excess rates experiencing double digit decreases.

  • The financial institution D&O marketplace has become very competitive. There is increased competition on primary layers with the strategy to aggressively quote primary terms to secure a low excess position. Insurers are looking to move down on towers where there is more rate and add more capacity, typically ventilated throughout a program.
  • While we saw alignment between primary, excess and Side A rates in Q4 2021 and the first half of this year, we have seen the excess rates diverge again with larger decreases than the primary, resulting in excess increased limit factors (ILFs) coming down.
  • Certain insurers are strategically targeting Side A D&O capacity if they write the primary D&O ABC layer.
  • Insurers are willing to consider enhanced coverage terms and have moved away from any tightening of terms.

Professional liability (E&O) varies by subsector, with regulatory trends a key focus by underwriters across all subsectors.

  • Asset managers: Insurers continue to have a targeted appetite for asset managers, with several insurers releasing new primary forms, including some new market entrants. This has led to aggressive competition in the marketplace for both primary and excess. Across the financial institutions industry, rate increases have come down most for asset management D&O/E&O programs, with rate decreases being much more common. Coverage remains stable, though a limited number of insurers have sought to apply language intended to eliminate ambiguity for cyber events by clarifying what is and is not covered.
  • Insurance companies: Rates have stabilized with any increases in the low to high single digits. Primary capacity continues to be limited with few viable insurers looking to write new business. However, some insurers have released new primary ICPL forms and, after several renewals with rate and retention increases, some insurers are willing to revisit programs that they had previously exited. “Silent” cyber exclusions are often applied to ICPL policies. Some insurers outright exclude cover relating to cost of insurance (COI) claims against life insurers, but we are seeing signs that other insurers may be willing to offer COI coverage subject to higher retentions and significant additional premium.
  • Banks: BPL continues to be a more challenging line, but rate and retention increases have largely stabilized. Rate increases have moderated and shown signs of flattening. Retention increases were largely applied over the past two years, but for those banks that still have aggressive retentions relative to size/exposures, there will likely be pressure to increase the retention. Primary capacity for large banks continues to be limited; however, as insurers look to grow, there has been renewed interest, and some insurers are aggressively pursuing primary and low excess layers. New market entrants have increased competition on excess capacity.

Several trends and exposures bear watching.

  • Crypto/digital assets: There has been a lack of regulatory guidance around digital asset activities for financial institutions, leading many companies to cautiously approach any digital asset products or services. The Biden administration released its first-ever crypto regulatory framework in September providing some direction, but it leaves many key questions unanswered requiring further exploration (i.e., is crypto a security). The framework also comments on a U.S. central bank digital currency and its potential benefits but seems limited to further consideration by an interagency working group to review the implications.
  • ESG: Regulatory scrutiny of ESG-related products and strategies continues to increase. In May of this year, the SEC proposed new rules intended to protect investors in ESG-themed investment products, which would impact investment advisers and mutual funds. State AGs are becoming more active in ESG policies and have recently brought a multi-state investigation against several large banks for their involvement in the U.N.’s Net-Zero Banking Alliance and ESG investing, which the states feel will inhibit lending to the fossil-fuel sector.


Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).


Jordan Siegman
U.S. Head of FINEX Financial Institutions

Contact us