Negotiating Pricing: What Brokers Can Do to Improve Directors and Officers (D&O) Liability Insurance Terms

Content Pillar: Underwriting & Pricing Factors
Focus: United States (emphasis on New York, San Francisco, and Chicago markets)

D&O insurance pricing is driven by underwriting detail, market capacity, and claims trends. Brokers who actively manage submissions, shape risk perception, and negotiate policy terms can materially lower premiums and secure stronger coverages. This article gives pragmatic, market-tested negotiation tactics, backed by market data and examples, so brokers can deliver measurable savings and better terms for corporate D&O buyers.

Why broker negotiation matters

• D&O is underwritten on facts, not templates. Insurers price around perceived enterprise risk: financials, governance, industry exposures, claims history, and management quality.
• Markets are carrier- and sector-sensitive. Major carriers (Chubb, AIG, Travelers, CNA, Zurich) have different appetites and appetite-driven pricing.
• Hard vs. soft cycles amplify impact. During hard markets, the right broker positioning can be the difference between a 20% increase and a 50% increase in premium.

Key data points:

• Small private-company D&O premiums often fall in the $5,000–$25,000 range for a $1M/$1M limit; very small entities may see lower costs, while more complex growth-stage companies typically pay more (source: Insureon).
• Mid-market private and public companies commonly see $50,000–$500,000+ depending on revenue, industry, and claims exposure; large public companies can pay seven-figure annual D&O premiums (market commentary: Marsh, Aon).

Sources:

• Insureon — D&O cost guide: https://www.insureon.com/small-business-insurance/d-o-insurance/cost
• Marsh/D&O market commentary (market cycles & rate trends): https://www.marsh.com

Prepare the submission to win priced advantage

Brokers who invest time before quoting see better pricing outcomes. Preparation reduces insurer uncertainty and improves leverage.

Actionable checklist for submissions:

• Executive summary: one-page risk story emphasizing conservative governance, stable cash flow, no regulatory investigations.
• Clean, organized attachments:
  • Last 3 years audited financials + interim statements
  • Cap table, revenue by geography/product
  • Board bios and governance scorecard (committees, independent directors, audit quality)
  • Claims history and litigation narrative
  • Material contracts, M&A pipeline, SEC/Regulatory notices
• Pre-underwriting remediation plan: planned policy changes, governance upgrades, ERM programs.

Link to related reading: Underwriting Checklist: What Insurers Look for When Evaluating Directors and Officers (D&O) Liability Insurance Risk

Negotiation levers brokers can pull (and typical pricing impact)

Brokers should optimize a mix of price and non-price levers. Below is a practical summary with typical market impacts (illustrative ranges based on broker market experience).

Notes:

• These impacts are directional; exact savings depend on insurer, industry, and market cycle.
• Increasing retention can materially reduce premium but shifts cash-flow risk to the insured—quantify via stress testing.

Related reading: Benchmarking Your Quote: Comparing Directors and Officers (D&O) Liability Insurance Pricing Across Providers

Tactics by company type and US market examples

Tailor negotiation strategies by company size, industry, and location. Below are representative examples referencing common U.S. markets.

• San Francisco — late-stage VC-backed tech company (Revenue: $30M, no public company status)

  • Typical market quotes for $1M/$1M limit: $12,000–$40,000.
  • Broker actions: present strong cyber controls, provide board bios and VC investor support letter, negotiate a $500k retention (saves ~15% on premium), solicit Chubb and CNA (technology appetite), obtain Side A enhancement for founders as a separate limit.

• New York City — mid-market financial services firm (Revenue: $150M, regulated)

  • Typical market quotes for $5M aggregate limit: $150,000–$450,000+ depending on regulatory exposure.
  • Broker actions: emphasis on regulatory compliance programs, strong audit committee disclosures, prioritize AIG and Zurich; negotiate D&O form clarifications around regulatory investigations; secure multi-year wording to stabilize pricing.

• Chicago — manufacturing private company (Revenue: $75M)

  • Typical market quotes for $2.5M limit: $40,000–$120,000.
  • Broker actions: highlight conservative leverage, stable loss ratios, narrow industry-specific exclusions, consider increasing retention to $1M if balance sheet permits.

When presenting these examples to carriers, include local claims data and securities litigation frequency to underscore risk posture. Cornerstone Research and other analytics vendors document concentration of securities class actions in markets like NY and CA, which influences carrier appetite and pricing.

Source for litigation trends:

• Cornerstone Research — securities class action trends (research reports on filings and damages): https://www.cornerstone.com/Insights/ (see applicable publications)

Negotiating policy language (not just premium)

Premium savings can be offset by weak coverage. Negotiation should protect both price and coverage:

Priority policy terms to negotiate:

• Severability and innocent insured language — preserves coverage where one director is alleged to have acted improperly.
• Insured vs. insured carvebacks — narrow harmful carvebacks that eliminate coverage for derivative suits.
• Definition of “claim” — ensure non-litigation demands (regulatory inquiries, subpoenas) are covered or clarified.
• Side A sublimits and Run-off — secure robust Side A protection and adequate run-off for M&A or leadership change.
• Consent to settle / Hammer clause — limit carrier leverage to force executives into unfavorable settlements.

Brokers who can trade minor premium increases to obtain outsized coverage improvements create better client value.

Related reading: Disclosure Quality and Financial Volatility: Underwriting Red Flags for Directors and Officers (D&O) Liability Insurance

Use benchmarking and hard data to win concessions

Brokers who arrive with market comparatives and hard numbers dominate negotiations.

• Prepare a benchmark table: peer company premiums, limits, retentions, and forms.
• Use carrier-specific loss experience and sector loss ratios (when available) to argue for rate moderation.
• Leverage capacity: if one carrier hardens, pivot to another with appetite for the client's sector (e.g., Zurich/CNA for middle market; Chubb/AIG for tech/financials).

Learn more on drivers you should benchmark: How Insurers Price Directors and Officers (D&O) Liability Insurance: Key Rating Drivers Explained

Quick negotiation playbook (action steps for brokers — implementation)

1. Assemble a pre-submission data pack (financials, governance, claims, ERM).
2. Run internal benchmarking (3–5 peer quotes and forms).
3. Solicit 5+ carriers—mix primary appetites and capacity providers.
4. Trade premium for coverage improvements where value-add is high (Side A, run-off).
5. Consider retention increases only after client stress-testing cash exposure.
6. Lock favorable multi-year deals when available (and cashflow permits).
7. Document underwriting concessions in renewal memo for carrier accountability.

Conclusion — measurable outcomes brokers should aim for

• Short-term: achieve 5%–30% premium reduction via mix of rate, retention, and carrier selection.
• Long-term: reduce volatility and cost through governance upgrades, claims prevention, and multiyear deals.
• Value add: improved policy wording, better Side A protection, and robust run-off can deliver exposure control equal to or greater than monetary premium savings.

For vertical reading and deeper underwriting detail, see:

• Industry, Financials and Governance: The 10 Most Important Factors That Affect Directors and Officers (D&O) Liability Insurance Premiums
• Claims History and Loss Experience: How Past Suits Influence Directors and Officers (D&O) Liability Insurance Renewal Costs

External sources referenced:

• Insureon — D&O insurance cost guidance: https://www.insureon.com/small-business-insurance/d-o-insurance/cost
• Marsh — D&O market commentary (market cycle & carrier capacity insights): https://www.marsh.com
• Cornerstone Research — securities class action research (claims trends affecting D&O): https://www.cornerstone.com/Insights/