Manager liability insurers operating in Germany had to settle more claims again in 2023. The number of cases has risen to 2,200. That is almost 7 percent more than in the previous year. Each claim cost insurers an average of almost 100,000 euros. The GDV reached these results.
Manager liability insurance, also known as D&O, pays compensation claims against managers if they breach their duties. The abbreviation D&O stands for Director’s and Officer’s Liability Insurance. It is a special form of financial loss liability insurance for members of management and supervisory bodies in companies. These include, for example, members of boards of directors, management or the supervisory board.
Economic situation increases the number of D&O cases
From the perspective of insurers, the number of cases has increased due to the economic situation and higher legal requirements. And the number of bankruptcies has recently increased significantly. These often result in high claims for damages from insolvency administrators against those responsible.
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In addition, there are constantly growing compliance requirements. Managers are personally liable if they do not have a functioning compliance system in place. A Forsa survey commissioned by GDV shows that not all companies comply with their legal obligations.
Although a whistleblower system has been mandatory for all companies with 50 or more employees since the end of 2023, around a quarter of the companies had not yet set up such a system months later. The GDV estimates that a total of almost 19,000 medium-sized companies in Germany may not have implemented the whistleblower protection law.
Insurers also expect there will be more claims for damages against managers in the near future. In the first half of 2024, corporate bankruptcies rose by 25 percent. There are also new liability risks, for example due to new information security requirements through the European NIS 2 directive.
GDV estimates the total D&O market at around 925 million euros
According to the current D&O statistics from GDV, the number of claims has increased for the second year in a row. The damage increases faster than the premium income. Specifically, the benefits reported to the GDV for 2023 increased by 9.4 percent to 216 million euros, and the contribution income increased by 5 percent to 458 million euros.
In 2023, insurers were able to realize settlement profits from losses in previous years. Therefore, the claims ratio after settlement was 39.4 percent, slightly below the previous year (42.4 percent). With D&O insurance, it usually takes a long time until the claims are settled.
In the long-term average over the past few years, insurers have had to deal with settlement losses. The original provisions were not sufficient to cover the damage.
Percentage changes in contributions and benefits from German D&O insurers at a glance:
Source: GDV
Important to know: Not all insurers active in Germany participate in the GDV statistics. And the composition of insurers in the GDV statistics has changed. In 2023, one company left the statistics and another company was added. Therefore the absolute numbers are not comparable. The market development of the respective reported rates of change is adjusted for these effects.
Overall, according to GDV estimates, the insurers involved in the statistics are likely to have a market share of 73 percent. The overall market is therefore significantly larger. Based on an industry estimate, he assumes a premium volume of up to 925 million euros for the German market.
