From the June 25-July 2, 2012 issue of National Underwriter Property & Casualty • Subscribe!

Chubb Survey Shows ‘Disconcerting’ Lack of D&O Worries

Chubb says there is a “general lack of concern” among surveyed public companies that their directors and officers will face a lawsuit.

According to the survey of 145 public companies, 80 percent of them think it is unlikely their executives will be sued.

“No one thinks they are going to get sued, but we are paying a lot of claims,” says Evan Rosenberg, senior vice president and global specialty lines manager for Chubb. He calls the results of the survey “disconcerting,” since 23 percent of the surveyed companies admitted their directors and officers have faced lawsuits in the past.

“Rates have gone down in the last seven or eight years, but the number of cases is not down; neither is how much attorneys charge for a defense,” he says. “Companies need to perform a scientific measure of D&O risk.”

Those that manage exposure “have a greater chance of receiving more favorable terms and pricing for the Directors & Officers Liability insurance,” Rosenberg adds.

He says the newest trend in this space relates to mergers-and-acquisition cases, where both companies involved in the transaction can be sued. In fact, there is a 90 percent chance that the acquired company will be sued by its shareholders, Chubb says.

Despite this potential exposure, 26 percent of companies do not have a documented M&A protocol, which may help to improve their defense in court and/or result in a lower settlement amount, notes Rosenberg.

Additionally, 78 percent of the survey’s respondents say they’re not worried about being investigated for violating the Foreign Corrupt Practices Act, which is now more aggressively enforced by the SEC and the Department of Justice.

Those investigations and related fines, which can be spurred by suspicions of bribery of foreign government officials or politicians, could cost a company millions. D&O policies can cover defense costs and fines for non-willful violations of the act, Rosenberg adds.

Comments

Resource Center

View All »

Contractors General Liability Coverage 102

What is a prior work exclusion? Which option is right for my client? Why do...

Sign up today to get a 50% matching credit -...

Insurance marketing sometimes seems like it's a game of swings and misses, but we're here...

Guide: 5 Steps to Selling Cyber

Cyber risk and data security is on the agenda of every business owner and executive....

Citation Correlation

Do rigger and signalperson qualifications correlate with the cause of crane and rigging accidents? ...

Complete Guide to Electronic Signatures in Property & Casualty Insurance...

In property and casualty insurance, closing new business quickly is key. Learn how to leverage...

INSTANT ACCESS: Complimentary Sales Closer Questionnaires

Help property owners or managers compare your commercial residential property insurance coverage vs. the competition....

Determining Vacant Property Perils and Valuations

Are your clients fully covered for Vacant Properties? In this economic climate, your insureds may...

Risk Management for Law Firms

This package of 3 concise risk management articles offers straightforward content and practical suggestions law...

Guide: Top 15 E&O Risks-And How To Avoid Them

Accidents happen. But when it's an errors and omissions oversight, that accident can open your...

We'll Show You How to Reach Your Sales Goals

Whether you work alone or have a team of agents working for you, we can...

PropertyCasualty360 Daily eNews

Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.