Mr. Siegel said “accounting games” typically start when the economy is bad. “It's cyclical. If the economy's going okay, then SOX will be deemed a success; but if it turns at all, what you'll see–and you've already started to see–is that it isn't the panacea people think.”

In particular, he said while companies have become more diligent and transparent about the quality of reported earnings, they are also highlighting different components of their results–other than earnings–as evidence of their well-being to investors. “They're saying, 'Look at our cash flows, [which] are really strong'…because there's more discretion on cash flows. You don't have to be transparent.”

Public companies are also talking about “other metrics,” like same-store sales, he noted. “Those aren't even accounting metrics. Auditors don't look at those [and] SOX doesn't cover them.” He added that “we're seeing metrics management rather than earnings management.”

If investors, analysts and underwriters are making decisions based on results a company is portraying with these new metrics–and if those results are manipulated or mismanaged in any way–then “you'll continue to see [D&O insurance] problems,” he predicted.

Greg Flood, chief operating officer for National Union, a unit of New York-based American International Group, said he believed the “regulatory zeal that came out of Enron, WorldCom” and other corporate accounting meltdowns “really created more securities claims” than SOX prevented.

“In our business, we're insuring the frailty of decision-making [and] the frailty of human nature, [and it's] more than likely that somebody's going to fail,” he said. “So I'm not so sure, as an insurer, that SOX has been a lot of help.”

He also observed that prior to SOX, U.S. stock exchanges were getting a lot of listings of American Depository Receipts from foreign companies. “Last year, only 10 percent of all foreign companies accessed capital markets here in the United States. The complexities of SOX were just too daunting,” he said. Other speakers suggested that foreign issuers were better risks from a D&O underwriter's perspective.

At an earlier session, Susan Muck, a defense lawyer for Fenwick & West in San Francisco, highlighted “the proliferation of internal investigations at public companies” as an “unintended consequence” of SOX, which she said will “have a dramatic impact” on D&O insurers.

In the post-SOX world, audit committees have become more active in overseeing financial and governance issues, and outside auditors are requiring investigations–in many instances examining issues that “have never before been issues,” she added.

With SOX disclosure requirements, many internal investigations are quickly disclosed, which then prompts securities class actions or SEC investigations, she said.

The documents created by these costly investigations are available to plaintiffs' lawyers and the Securities and Exchange Commission pursuing such actions, she noted. “What I find most troubling is that [defense] lawyers are now coming in to represent every constituency possible” in these actions–the CEO, the CFO, the audit committee and the company sometimes,” she said. “All of those lawyers are feeding from the same financial trough, which will have greater impact on the D&O industry.”