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Survey also shows one in four public companies raised liability limits in 2011
“The fact that more directors and officers are asking about their specific programs clearly shows they are concerned about the exposures they face and ensuring their personal assets are protected,” said
Indeed, this year’s survey found that regulatory claims again topped the list of D&O liability concerns overall, with 81% of respondents citing these as a top three concern, an increase from 78% in 2010. More than two-thirds (68%) of respondents ranked direct shareholder and investor lawsuits as a top three concern, followed by derivative shareholder/investor litigation (58%).
Private Companies Hit With Cost Increases
“Unlike public companies, where rates for D&O coverage have either declined or remained relatively flat over the past few years, the private sector has seen some hardening,” said Racioppo. “The growing number of claims brought on by employees at private companies, along with an increase in the cost to defend claims, are some of the reasons insurers are seeking to drive rate increases. In the public sector, based on the responses, prices remained relatively stable, but public companies are also beginning to see a market transition as well.
Among other survey highlights:
- The scope of coverage for directors was rated a concern by three out of four (75%) public company respondents, yet very few firms (7%) actually purchased insurance dedicated to independent/outside directors.
- Nearly two in 10 (19%) survey respondents that filed a D&O claim last year were dissatisfied with the insurer’s handling of the claim. This percentage suggests insurers should make claim handling a priority in terms of improving customer service.
- Despite increased interest from their directors and officers, less than half (47%) of the respondents conducted an independent review of their D&O policies in the past two years. Among those that conducted a review, 45% used a law firm, while 36% completed the process through a broker.
“After nearly 10 years of diminishing premium levels, 2012 may very well be a year of transition in the D&O marketplace. There are many factors impacting the D&O arena, and underwriters have begun to push back in the private, nonprofit and public markets. The actions of directors and officers today are being watched closely, and they are looking for certainty that their D&O program provides the level of protection needed in advance of the claim,” concluded Racioppo.
For additional details and research findings, see the
About the Survey
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