D&O Rates Still Soaring
Insurance premiums for directors and officers coverage increased substantially from 2002 to 2003, but there were signs of market stabilization going into last years fourth quarter, a survey by Tillinghast revealed.
The D&O liability survey of 2,068 U.S. participants in 16 business categories found that rates have increased 33 percent, on average, during the period. Seventy percent said they saw premium increases, while only 19 percent reported a decrease.
The desire to have the coverage has not cooled, despite hefty premium hikes. Indeed, 97 percent of those surveyed said they purchased the coverage, a figure consistent with 2002 and 2001 totals.
There was some drop in capacityfalling from $1.5 billion in 2002 to $1.35 billion in 2003. This is the lowest capacity level since 1997, when it stood at $1.35 billion before jumping to $1.5 billion the following year.
As rates increased, the survey found, policy limits fell while deductibles and retentions rose. The report said technology, transportation, communications and utilities business classes saw the greatest drop in policy limits. The report said that 56 percent of U.S. participants with renewals in the second half of 2003 reported increases in their deductibles or retentions.
Despite the continuing premium increases, there are signs of stabilization in the market, the survey found. The number of participants who saw increases in premium in the third quarter of 2003 fell to 62 percent, compared to 76 percent who saw increases in the third quarter of 2002. In addition, only 27 percent said they increased deductibles or retentions in the third quarter of 2003, compared to 55 percent in 2002.
More information is available at www.towersperrin.com/tillinghast.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, January 30, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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