Louise Pennington, managing principal and head of client development in New York for Integro Insurance Brokers, agrees that the marketplace is generally "now following" the premise for informal investigatory coverage for individuals as originally presented in the Chartis' product. "That is a significant change from last year," when the product was first introduced, she says.

ON THE PRICING FRONT

How has this pre-claim inquiry cover for individuals affected the pricing of policies?

"Attempts made by the marketplace to charge significantly more for the coverage have not worked as the insurers have hoped," says Pennington.

Carriers "were looking for a premium, because it certainly was more coverage than had previously been provided," but the continuing soft and competitive market forced most of the additional premium out.

"Last summer, there were always multiple quotes being received—with and without informal investigatory coverage—and definitely different pricing for each," Pennington says. "While carriers are still trying to do that, I just don't think this marketplace is letting them get the additional premium they were looking for," she says, suggesting that lower discounts on declining overall D&O program premiums are more likely.

Traditional risks without much claims activity might be seeing double-digit decreases before adding the coverage. So to include it, "perhaps the carrier wouldn't give them quite the equally significant discount," she explains.

Norton and Polikoff add that in their experience pricing definitely has come down since last year when Chartis was seeking 15 percent additional premium.

"They were sticking to their guns on that strategy through the beginning of this year," Norton reports. "Now we're starting to see that constrict. Sometimes it's only 5 percent," he says, referring not just to Chartis, but to all the major competitors in the primary D&O market that have tried to match the coverage.

Polikoff reports that some carriers now even offer these endorsements at no additional premium, putting the upper end of charges at a 10 percent.

POINTS OF DIFFERENCE

Unlike Chartis' Executive Edge, the competitors—Chubb, ACE and Arch among them—have not delivered the key features of pre-inquiry coverage in entirely new policy forms, instead opting to add them by endorsement, Norton says.

Asked to describe other distinctions in coverage language from carrier to carrier that they highlight for clients, brokers say they see few.

"As a salesperson, it really hasn't mattered what the nuances are, as long as the coverage is good. And the coverage is good. I'm recommending it," Norton says.

"These coverages are not different enough for any buyers to perceive. I view them as all essentially the same," he says.

But Rob Yellen, chief underwriting officer of the Executive Liability Division of Chartis, says "pre-claim inquiry" coverage, while not trademarked, is unique to his company.

Others may broaden the definition of claim, but they have not fixed the way the insuring clause works to trigger coverage. "You still need a wrongful act. You might need to be a target," he says, pointing to "one of the most fundamental problems of D&O coverage" and advising that clients have white-collar defense lawyers, in addition to brokers, help them work through coverage differences.

Norton insists the differences are not that meaningful. "What I'm looking for is how much are you going to charge and what else have you done for my client historically. What's your position on the program? These factors will be more important."

Polikoff agrees. "They're pretty much covering the same thing. If you get any type of request from any enforcement body, they'll cover the cost of having an attorney sit with you.

GROWING AWARENESS? YES. GROWING BUYER APPETITE? MAYBE

How aware are clients of this pre-claim coverage—and how eager are they to buy it?

"I won't say it's a commodity at this point, but every public company is being offered it," says Polikoff. "Whether they buy it isn't a question of one coverage being better than another. It's are they willing to pay for it if the carrier is charging for it," she says.

Pennington agrees that "clients are very much aware of the availability of this type of coverage. I'd be shocked if most clients don't say they are not only informed about it, but are seeking it out." Indeed, in her view, "the breadth of the coverage is certainly worth the incremental cost" to the buyers she represents.

Polikoff, however, says it's "a difficult sell," noting that "the number one thing clients ask is, 'How likely is this,'" referring to those that haven't yet been under the glare of SEC scrutiny. Those that have say the cost of having a attorney during an SEC interview "was actually not that much," she says, adding that for large public companies, much if not all the cost will fall within retentions that  can be as high as $1 million.