Directors & Officers Market Trends and Overview

Saturday, May 19, 2012

“Obtaining new D&O insurance was a roller coaster this year. Working with Susan Lamonica made our life so much easier. Professional attitude, excellent and easy to understand proposals, timely follow-up, face-to-face meetings, she did it all. Trustworthy and very knowledgeable.”
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D&O Liability: Questions and Answers


D&O Liability Explained

D&O Market Trends

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D&O/EPL Evolving

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Directors & Offiers Liability Insurance is a Critical for Publicly Traded Companies

Directors & Officers liability insurance coverage for public companies have undergone drastic changes recently. Insurance carriers are raising premiums and tightening coverage in response to the flood of lawsuits, losses from the overall decline of the stock market, the tragedy of 9/11 and corporate scandals. The continued volatility of the stock market could lead to an increase in claims against executives. The result is increased rates and more exclusions for Directors & Officers liability insurance policies.

This makes it harder for you to secure appropriate Directors & Officers liability insurance coverage — not only at the right price — but also a Directors & Officers coverage that offers security both to your business assets and also your personal assets which are at risk. That's why you need someone that specializes in insuring public companies and has access to the whole Directors & Officers insurance market.

Extended Directors & Officers Liability Insurance Coverage

With over 100 years of experience, InsurePro - a division of Gaston & Associates, has access to the whole Directors & Officers liability insurance market including surplus lines and London syndicates. This means that we can often negotiate a Directors & Officers liability insurance policy that offers extended coverage at a very competitive price.

The driving goals of InsurePro’s marketing effort are to secure quotations that are more cost competitive, and to evaluate the structure of any existing Directors and Officers (D&O) coverage.

Factors that Impact Directors & Officers Liability Insurance Underwriting

A wide variety of factors impact Public Directors & Officers underwriting including:

	Size and industry
	Financial characteristics
	Corporate practices
	Board of directors

Market Hardening for Directors & Officers Liability

There are several factors influencing the pricing:

	The insurance market has hardened in the last couple of years. We are frequently encountering higher Directors & Officers liability insurance pricing across the board on renewals, and this is especially true with respect to Public Companies.
	Many insurance companies have withdrawn from the Directors & Officers liability insurance market and are declining to provide Directors & Officers coverage, at least temporarily. This makes it even more challenging to secure quotations and coverage as the lack of availability of carriers adversely affects Directors & Officers pricing.

EPL Might Erode the Directors & Officers Coverage

It is now more common to write EPL on the same policy as the Directors & Officers liability insurance. While this practice might offer some savings in the short term, one should consider that the EPL exposure for the entity might be quite significant and a large claim can quickly erode the Directors & Officers coverage that is available.

InsurePro generally recommends having the EPL as a separate insurance policy, but factors specific to your industry or your business might influence whether or not having the EPL on the same policy as the Directors & Officers makes sense.

Increase in Directors & Officers Claims

Approximately 50% of all Directors & Officers liability insurance claims are tied to Employment Practices Liability claims. Employees that were once silent about workplace harassment and discrimination are now speaking out and taking action against their employers.
Plant closings, layoffs, and mergers and acquisitions are commonplace events that are providing fertile ground for multi-million dollar class action claims.
The case of Enron in late 2001, coupled with an already large downturn in the economy, has further affected the pricing for Directors & Officers liability insurance.

Over the past twelve to eighteen months, underwriters have become increasingly vocal regarding their inability to maintain profitability given current pricing levels. Directors & Officers liability insurance underwriters are reporting increased claims activity. Greater claim activity, the overall deterioration in market conditions as a result of lost investment income, and the World Trade Center catastrophe have combined to create a climate that translates to reductions in available coverage and higher premiums for Directors & Officers.

Easy steps to get D&O insurance coverage


	Click on Coverage Coach to start your questionnaire and application for a free Directors & Officers quote

Once you received your Directors and Officers Liability quote, you can review the terms. Our experienced insurance professionals are available should you have questions.

Once you accept our Directors & Officers quote, we can proceed and bind your Directors & Officers insurance coverage.