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D&O Insurance in Spain

  • December 2014
  • -
  • Finaccord
  • -
  • 22 pages

D&O Insurance in Spain is about the market for directors' and officers' liability cover in Spain. In addition to documenting the development of the market value from 2010 to 2014, the report also divides it for the most recent year for three key segmentations: between publicly listed corporate enterprises, unlisted corporate enterprises and other entities (e.g. non-incorporated businesses and the not-for-profit sector); between the financial services sector, the non-financial services sector and the manufacturing / primary sector; and between underwriters based in Spain itself and underwriters located outside of it.

These unique market splits are based in part on a survey of leading brokers and underwriters of D&O insurance in Spain. This same survey also identifies the underwriters of this type of cover used by brokers on a regular basis, gives an input into Finaccord's estimates for the market shares of underwriters of D&O insurance, provides a basis for commentary surrounding distribution channels used for this type of cover, informs observations concerning trends in claims by type of insured entity, and guides Finaccord's forecasts for the market value through to 2018.

Table Of Contents

DandO Insurance in Spain
0.0 EXECUTIVE SUMMARY 1
1.0 INTRODUCTION 3
What is this report about? 3
Rationale 3
Several factors underpin the rationale for the production of a study about DandO insurance 3
Methodology 3
Research program 3
Market data analysis 3
Definitions 4
DandO insurance 4
Policies are usually taken out by companies rather than by company managers… 4
… and typically pay for both defence costs and the damages paid to the claimant 4
DandO insurance can be bought by a variety of different types of entity 4
In Europe, policies typically incorporate Side A and Side B cover but not always Side C cover 4
Stand-alone cover bought for certain specialised risks is excluded from the definition of DandO insurance 5
Premiums 5
Sectors 5
Abbreviations 5
Finaccord 6
2.0 MARKET ANALYSIS 7
Introduction 7
Regulatory background 7
Stock corporations are characterised by a unitary board system but are typically divided into committees 7
Shareholders representing 5% of the share capital can sue directors on behalf of the company… 7
… although shareholder action is not the only way to start legal proceedings against directors 8
DandO insurance falls under the relevant provisions of the 'Ley de Contrato de Seguros' 8
Number of insurable entities 8
Recession has caused a contraction in the number of insurable entities in Spain… 8
Market value, growth and segmentation 9
… but the market value has achieved rapid growth since 2010… 9
. easily outpacing the economy as a whole and the wider market for general liability insurance 10
Premium rates have increased for the construction industry and for financial institutions 10
Publicly listed firms are likely to account for over a half of the total DandO insurance market in Spain… 11
… and financial institutions for a very substantial part of it 11
The great majority of premiums are earned by underwriters based in Spain 14
Penetration levels 14
There remains scope to increase penetration, even among publicly listed companies… 14
… as well as among firms with an annual turnover in excess of EUR 10 million 14
Underwriter market shares and specialisms 15
Four underwriters are utilised on a regular basis by brokers for DandO insurance… 15
… with AIG employed by nearly all of them 16
Four insurers are likely to hold a market share of between 10% and 15% 17
Markel has developed DandO products specifically designed for several niche segments 17
MAPFRE is likely to generate substantial business through its agency network and via banks 18
Key brokers and broker specialisms 18
Brokers are not the only significant distribution channel for DandO insurance in Spain…. 18
… albeit larger accounts are mainly served by Aon, Marsh and Willis 18
Trends in claims and key risks 18
Claims ratios and frequency have been climbing from a very low base in recent years… 18
… in part as a consequence of problems in the construction and financial sectors… 19
… although Spain's economy turned in an improved performance in 2014 19
Defence costs account for a substantial proportion of all DandO claims paid in Spain 19
Future outlook 20
In real terms, a compound annual rate of growth of 7% is forecast for the period from 2014 to 2018… 20
… driven mainly by increasing penetration rather than higher premium rates 20
3.0 APPENDIX 22
Brokers and insurers participating in the survey 22

LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY 1
Key market data for DandO insurance in Spain 2
1.0 INTRODUCTION 3
2.0 MARKET ANALYSIS 7
Number of insurable entities segmented by legal structure, size and sector in Spain, 2014. 9
Premiums for DandO insurance and the percentage of the total general liability insurance market that this
represents in Spain, 2010 and 2014 10
Segmentation of DandO insurance premiums in Spain between publicly listed corporate enterprises,
unlisted corporate enterprises and other organisations, 2014 11
Segmentation of DandO insurance premiums in Spain between the financial services sector, the nonfinancial
services sector and the manufacturing / primary sector, 2014 12
Ratio of DandO insurance premiums to gross value added in the financial services sector, the non-financial
services sector and the manufacturing / primary sector in Spain, 2014 (table) 13
Ratio of DandO insurance premiums to gross value added in the financial services sector, the non-financial
services sector and the manufacturing / primary sector in Spain, 2014 13
Segmentation of DandO insurance premiums in Spain between underwriters based in Spain and
underwriters based abroad, 2014 14
Proportion of publicly listed corporate enterprises and unlisted corporate enterprises with revenues above
EUR 10 million with DandO insurance in Spain, 2014 15
Frequency of usage of specific insurance underwriters by major brokers of DandO insurance in Spain, 2014
. 16
Estimated market shares of DandO insurance premiums of underwriters in Spain, 2014 17
Segmentation of claims costs between defence costs and other claims costs in Spain in a typical year 20
Forecast premiums for DandO insurance in Spain, 2018 21
3.0 APPENDIX 22

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