Tillinghast: D&O rates rose 29%. (Property/Casualty: Loss/Risk Management Notes).
In a sign of the continuing hardening of the market, the industrywide 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 arrangements to obtain the limits they sought," Tillinghast said in its study.
Terms and conditions also tightened. The average entity/corporate reimbursement flat deductible 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) this has meant that many insurers experienced adverse loss ratios and saw profits turn to losses on this line of business."
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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|Article Type:||Brief Article|
|Date:||Jul 1, 2003|
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