Directors and officers liability insurance rates have continued to harden in the first quarter of 2020 amid the coronavirus pandemic, according to a report from Marsh.

Public companies saw a 44% increase in total program pricing and a 26% increase in primary rates during the first quarter of 2020. Ninety-five percent of Marsh clients who renewed their D&O liability insurance programs during the quarter saw an increase in total pricing, while primary pricing increased for 89% of clients.

Marsh expects that the rate increases will continue to accelerate at least through the third quarter and said it is closely monitoring market trends monthly.

Insurers said the trends do not reflect a short-term restoration or correction of price increases, adding that the current conditions will likely persist for several years and will be further exacerbated by the COVID-19 pandemic, according to the report.

The recent trend of coronavirus-related litigation could also continue to affect pricing and terms and conditions. Several D&O lawsuits related to the pandemic had been filed in the first quarter, including securities class actions and shareholder derivative actions.

Marsh projected that companies could face nearly 400 securities class actions in 2020, which includes 98 class action lawsuits already filed during the first quarter. The projected figure would represent a "modest decline" from 423 total class actions in 2019, according to the report, citing data from NERA Economic Consulting.

Some insurers had reportedly introduced insolvency exclusions and required buyers to sign warranty letters in some circumstances. Some insurers had also taken tougher positions on policy language and claims. Some buyers with upcoming renewals may be forced to choose between higher limits and broader coverage or saving money when cash flow may be critical due to pricing increases and more stringent underwriting measures.

The private D&O market is also expected to become less favorable in the remainder of 2020, due to the erosion of the profitability of combined D&O and employment practices liability programs due to growing EPL losses. Insurers are reportedly bracing for more medium to high severity D&O claims amid the economic downturn, as private companies fall in distress or go bankrupt.

Private companies saw an 8.5% increase in average pricing in the first quarter, while total program pricing rose 8.9%. Some private companies also saw pricing hikes of 50% or more, according to the report.