HARRIS POLL REVEALS HALF OF FORTUNE 1000 OUTSIDE DIRECTORS HAVE BEEN TARGETS OF LAWSUITS; MANY EXPRESS LITTLE CONFIDENCE IN COURT SYSTEM.
SIMSBURY, Conn., March 2 /PRNewswire/ -- Fifty percent of outside directors from America's largest companies have been sued in connection with their board service, according to a Louis Harris & Associates poll commissioned by Executive Risk Management Associates, a directors and officers (D&O) partnership between The Aetna Casualty and Surety Company and Executive Re, Inc. The poll revealed that inadequate D&O insurance heads the list of nine factors that outside directors and CEOs say discourage business people from serving on corporate boards. Approximately 90 percent of outside directors and CEOs said inadequate insurance was "a major barrier" to joining a board. Robert Leitman, senior vice president of the New York-based Harris organization, said he was surprised by the large number of directors who have been sued as well as by the frequency of the suits. "It's clear that the outside directors live in an environment where being sued is almost part of the process of doing business," he said. The Harris poll also revealed that a substantial number of directors do not trust the court system to deliver justice in the event a lawsuit is brought against them. Fewer than half the outside directors (46 percent) and
CEOs (43 percent) said they were "very confident" that the courts would exonerate them of liability in a lawsuit - even if they had acted prudently and responsibly in discharging their duties.
In addition, the poll revealed that 93 percent of outside directors and CEOs believe that over the next three years the probability of being sued will be as high or higher than it is today. Mark Rosen, vice president of Simsbury, Conn.-based Executive Risk, said that D&O insurance plays a critical role in corporations retaining top-caliber business leaders. "Given the frequency of lawsuits and the poll data showing that many directors are skeptical about being treated fairly in the courts, the protection that D&O insurance provides is critical to retaining top talent at the board level," Rosen said. "This is important not only for individual companies, but the American economy as a whole, because America's ability to compete globally depends in large part on the quality of the people who run our companies." The Harris poll was commissioned because of Executive Risk's interest in broader issues that "reflect not only our intellectual curiosity, but also very practical considerations," Rosen said. "We want to continue to expand our understanding of the risks we insure, the adequacy of our insurance product and the role it plays for corporations and their directors and officers," he said. Executive Risk Management Associates, established in 1986, is a Connecticut general partnership of The Aetna Casualty and Surety Company and Executive Re Inc., the parent company of Executive Re Indemnity Inc., Aetna's principal D&O reinsurer in the directors and officers liability business. Aetna is the third largest domestic provider of D&O insurance. Executive Risk Management Associates provides funding to the Institute for Research on boards of directors, a non-profit provider of impartial research on issues related to corporate governance. Copies of the full report are available by calling the contact below. -0- 3/2/93 /CONTACT: Christine Sparmer, communications manager of Aetna/Executive Risk, 203-280-0412/
CO: Aetna Casualty and Surety Company ST: Connecticut IN: INS SU:
TS -- NYFNS1 -- 1731 03/02/93 07:30 EST
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|Date:||Mar 2, 1993|
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