NEW YORK–Directors and officers insurers will see lower levels of claims payouts if they get behind the idea of having boards of directors talk directly to shareholders about questions before them, an expert suggested here.

Ira Millstein, senior associate dean for corporate governance at the Yale School of Management and a senior partner for Weil, Gotshal & Manges, made his plea on Tuesday during a luncheon address at the 2007 Standard & Poor's Insurance Conference.

“If shareholders are given a chance to voice objections in early, nonbinding communications, they're going to be less likely to sue” the companies that D&O carriers insure, he said, noting that while corporate boards could not possibly talk to all their shareholders, they would call in the major institutional investors for these discussions on key issues.

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