Tillinghast: D&O rates rose 29%. (Property/Casualty: Loss/Risk Management Notes).Directors and officers insurance premium rates jumped 29% in 2002, the largest increase the market has seen in almost 20 years, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a survey by Tillinghast-Towers Perrin. In a sign of the continuing hardening hardening, in metallurgy, treatment of metals to increase their resistance to penetration. A metal is harder when it has small grains, which result when the metal is cooled rapidly. of the market, the industrywide in·dus·try·wide adv. & adj. Throughout an entire industry: sales that have decreased industrywide; industrywide cooperation. capacity for D&O coverage dropped for the second year in a row to $1.50 billion, the lowest level since 1998 and down from a high of $1.58 billion in 2000. "Many D&O insurers were increasingly selective as to which risks qualified for their full limits capacity in 2002. This meant that buyers of D&O insurance often found it necessary to purchase smaller layers of insurance from more carriers or employ quota share For This article is about quota shares (shares of the quota). For other usages of quota, see, see . A quota share is a specified number or percentage of the allotment as a whole (quota), that is prescribed to each individual entity (see Non-tariff barriers to trade). arrangements to obtain the limits they sought," Tillinghast said in its study. Terms and conditions also tightened. The average entity/corporate reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. flat deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). rose 19% in 2002 to $497,000, up from $418,000 in 2001 and up substantially from $380,000, reported in Tillinghast's 2000 survey. "This hardening follows five years of annual premium decreases in the second half of the 1990s," Tillinghast said. "Coupled with the recent alarming rise in the costs of D&O lawsuits (particularly securities litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ) this has meant that many insurers experienced adverse loss ratios and saw profits turn to losses on this line of business." [GRAPH OMITTED] Full Limits D&O Capacity for U.S. For-Profit Companies The total amount of coverage offered by insurers in the D&O market in 2002 retreated to its 1998 level, down from the all-time high reported in the 2000 survey. 1984 373 1985 256 1986 412 1987 554 1988 579 1989 605 1990 638 1991 703 1992 726 1993 776 1994 835 1995 895 1996 1,155 1997 1,350 1998 1,500 1999 1,550 2000 1,575 2001 1,550 2002 1,500 Source: Tillinghast-Towers Perrin 2002 Directors and Officers Survey Note: Table made from bar graph |
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