The basic economic principle of supply and demand is the theme of the first quarter. The supply of capital is driving pricing behavior in all segments of the commercial lines market.

Let’s start with the directors and officers (D&O) market, where the free fall in premiums continued through the quarter. Given the record level of securities claim settlements in 2022 and the increase in derivative claims, the falling premiums seem to defy logic until one accounts for the number of new entrants in the D&O market in the last two years. The high D&O premiums of 2020 and 2021 attracted new capital. The number of new players coupled with a frozen IPO market has led to a lot of capital chasing a finite number of opportunities—the result is very favorable pricing conditions for D&O insurance buyers.