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Underwriters Weigh InTM Survey
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Q9
As you think about quoting Side A in 2026, do you anticipate being more concerned about the economy (bankruptcy risk) or evolving derivative suit risk?
2025 Survey Results:
Evolving derivative suit risk continues to be the larger concern for underwriters.
Woodruff Sawyer Commentary
Notwithstanding carrier concerns about the global economy as expressed in reaction to question 1, carriers as a group are more concerned about the way in which the derivative suit threat is evolving, making it more difficult to underwrite.
Underwriter Comments
Bankruptcy risk is so much easier to anticipate than derivatives. I can’t worry about a black box (derivatives) all the time, need to use judgement as the deals come up.
You can underwrite to bankruptcy likelihood, whereas derivatives can hit healthy companies.
Series of unfavorable rulings out of Delaware continue to hurt carriers.
While not perfect, it’s generally easier to handicap bankruptcy risk. It’s much more difficult to underwrite to derivate risk (both from a frequency and severity perspective)....
Bankruptcy risk is avoidable with solid underwriting acumen.
I am more concerned about the derivative suits due to severity.
Side A is not the low exposure cover it used to be, and rates need to reflect this. Side A pricing should never go back to what it was prior to 2020.
I think the BK’s will stay roughly the same, but derivatives could go on a tear....