"You have higher deductibles and tighter terms as well, but at the end of the day, rates are back just about to what they were in 1993, adjusted for inflation," he added yesterday during a press briefing by Lloyd's underwriters here during the Risk and Insurance Management Society's annual conference.

Indeed, property and other commercial insurance markets have been severely underpriced relative to the risks being assumed by insurers for years now, said Mr. Stewart. "The insurance industry has to make money to survive," he said, stating that steep rate hikes are more than justified relative to the losses being paid out and the exposures being insured.

Chris Warrior, D&O underwriter at Faraday, said a variety of conditions have prompted hundreds of shareholder lawsuits and put the heat on directors and officers liability underwriters.

He mentioned the tens of billions of dollars in Sept. 11 property, workers' compensation and business interruption losses, the collapse of many once high-flying technology firms, as well as the accounting shenanigans that crippled Enron and that threaten other firms.

Mr. Warrior said that that the Enron fiasco had sent insurance rates soaring because it "raises questions about the entire financial foundation" of the American economy.

Even before Enron broke, shareholder suits were reaching record levels thanks to the plethora of technology companies that failed to live up to anticipated earnings, and which then saw their share value collapse when left to the not-so-tender mercies of the stock market, the Lloyd's underwriters said.

"It's clear that many CFOs were desperate to support the share price of their companies to meet analyst expectations and to fund acquisitions with overpriced stock," said Mr. Warrior. With the complicity of their equally conflicted auditors, he added, "they have left shareholders and the D&O insurance industry with a huge financial loss."

Most D&O carriers are ill equipped to cope with the aftermath of the dot.com crash and the accounting charade perpetrated by many companies, he warned. "The industry is dramatically under-reserved for these exposures," he said.

"Many carriers are only now waking up to the exposures they face." Severe price hikes and coverage restrictions are understandable and entirely justified in this litigation frenzy, he added.

Julian James, director of worldwide markets at Lloyd's, added that the specter of rising rates had drawn badly needed capacity into the insurance market, pointing out that Lloyd's had generated record capital for 2002. He said a return to profitability by the industry would draw even more capital, to the benefit of buyers.

In the meantime, he said that carriers, brokers and commercial insurance buyers must work more closely together to adapt to challenging market conditions until prices begin to stabilize. "Now more than ever, risk managers, insurers and brokers need to have as transparent a relationship as possible to deal with these mounting exposures and coverage placement challenges," he said.