Q2 2023 Risk & Response Index: First Republic, Submarines, and Frugal Founders

Our Insurance Risk & Response Index for Q2 2023 is here. 

This report analyzes the insurance buying patterns of startups each quarter. Taken from proprietary, internal data, the report offers an analysis of the purchasing decisions and trends for three significant policies: Directors and Officers, Employment Practices Liability, and Technology Errors and Omissions.

Sneak Peek at Q2 2023 Risk & response Index

This quarter, we initially saw a settling period from March’s post-SVB spike, followed by a gradual, unseasonal increase in shopped policies across the board to close it out.

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

As another unprecedented banking failure rocked Silicon Valley and beyond, the startup community responded with risk transfer, still unsettled by what seemed to be an unstable financial environment. 

After the frenzy of the SVB collapse in Q1, searches for D&O quotes with $2 million limits increased 89% month-over-month from March to April. The overall volume of quotes requested were down between March and April but showed a 15% increase compared to February. While the acute crisis of the SVB closure has since resolved, founders are now reassessing the risks involved in their startups — and taking steps to minimize them. 

From Embroker’s Chief Revenue Officer, Ben Jennings: 

“Founders are continuing to feel the external and internal pressures on their business, evidenced by the types of insurance policies they’re exploring. Still recovering from an unsettling first quarter, startup founders are looking for the right insurance policies to cover them from a broader range of potential risks. They’re hoping for the best, but preparing for the worst.”

Q2 saw an increase in both of these policies, but the limits for EPLI dropped dramatically. This may be the result of decreased layoff activity in the tech and startup sector, staff getting used to being back in office or permanently staying at home, or summer settling in, and everyone simply enjoying a little more sunshine. 

To find out just how many people reduced their EPLI limits in Q2, and for more data and insights, check out our full Risk & Response Index here. 

As well, read the full press release, including a quote from Embroker’s Chief Insurance Officer, David Derigiotis, here.