Q2 2023 Insurance Risk and Response Index

Our Insurance Risk and Response Index for the second quarter of 2023 it’s here.

This report analyzes the insurance purchasing patterns of new companies each quarter. Drawn from proprietary internal data, the report provides analysis of purchasing decisions and trends for three major policies: directors and officers, employment practice liability, and technological errors and omissions.

Q2 2023 Risk Response Index Preview

This quarter we initially saw a break-in period from the post-SVB peak in March, followed by a gradual, non-seasonal increase in policies bought across the board to close it out.

The data reveals that when looking for coverage, founders are still looking for higher limits on Directors and Officers (D&O) insurance. The number of companies requesting coverage limits of $3 million increased from 12% in April to 21% in June. As companies grow or anticipate a riskier business environment, they will opt for higher limits, sometimes up to $5 million, to minimize loss or liability.

As another unprecedented bank failure rocked Silicon Valley and beyond, the startup community responded with risk transfer, still uneasy about what appeared to be a shaky financial environment.

After the frenzy of the SVB collapse in the first quarter, searches for D&O listings with $2 million limits increased 89% month-over-month from March to April. The overall volume of solicited quotes decreased between March and April, but showed an increase of 15% compared to February. While the acute crisis of SVB’s closure has since been resolved, the founders are now reassessing the risks involved in their new ventures and taking steps to minimize them.

From Embroker’s Chief Revenue Officer, Ben Jennings:

“Founders continue to feel external and internal pressures on their business, as evidenced by the types of insurance policies they are exploring. Still reeling from an unnerving first quarter, startup founders are searching for the right insurance policies to cover them from a broader range of potential risks. They hope for the best, but prepare for the worst.

The second quarter saw an increase in both policies, but the limits for EPLI were dramatically lowered. This may be the result of decreased layoff activity in the technology and startup sector, staff getting used to being back in the office or staying home permanently, or summer settling in, and everyone just enjoying a little more sun.

To find out how many people lowered their EPLI limits in Q2 and for more data and information, see our full risk and response index here.

Also, read the full press release, including a quote from Embroker’s director of insurance, David Derigiotis, here.

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