Insurance and bank industry officials and lawyers estimatepremiums for small banks have risen at least 15 percent since thefinancial crisis spanning the late 2000s. Some insurers boostdeductibles and write policies that leave insureds uncovered ifregulators take future action.

The Federal Deposit Insurance Corp. (FDIC) has been increasinglegal efforts to punish corrupt executives and directors of banksthat collapsed during the financial crisis. The FDIC has been ableto bring in hundreds of millions of dollars in legal settlements sofar to offset the $86.8 billion in losses the deposit insurancefund has incurred since 2008.

As a result of increased government pressure and a history ofbank failures, insurance premiums including D&O coverage formembers of the banking industry are rising dramatically. Theproblem is compounded for smaller banks; many are still dealingwith financial troubles related to the crisis, lower interestrates, new regulations and a lack of demand for loans.

FDIC statistics include:

• The agency typically tries to settle claims beforefiling a suit and collected $337 million in settlements in 2012

• FDIC has 3  years from the time of a bank'sfailure to file a lawsuit

• 19 suits have been filed against former executivesand directors since October 2012 (including 8 so far in 2013)

• 94 lawsuits have been authorized this year, up from54 last year.

AH&T Insurance in Newark, N.J., estimates that insurancerates for community banks rose 5 percent last year on a $10 millionpolicy. The rise came in the wake of the 10 to 15 percent increaseimmediately following the crisis. Not all lawsuits are a directresult of fraud; some concern directors who should have acted withgreater caution.