NU Online News Service, June 23, 3:52 p.m. EDT

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Companies in the United Kingdom, particularly those traded inthe United States, are buying huge amounts of insurance coverage asincreasing class actions target their management, a survey of riskmanagers has found.

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The poll, by the London-based Association of Insurance and RiskManagers and the New York-headquartered Advisen Ltd. market dataanalytics firm, found about 25 percent of firms responding saidthey bought ?100 million ($163 million) or more directors andofficers liability coverage.

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In its report Advisen said the survey put chemical, naturalresources and pharmaceutical companies on top with the highestestimated average annual D&O premium (?13.2 million, or $21.6million), but that figure was skewed significantly by one companythat paid a very large premium.

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The financial services sector came in as the second biggestspenders with an average of ?12.4 million ($20.3 million).

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Advisen said 277 firms responded to the survey and most of thoseparticipating represented larger companies, with two-thirds havingannual revenue of more than ?1 billion ($1.65 billion).

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Companies with U.S. home offices, or those issuing AmericanDepository Receipts through U.S. exchanges, were found to haveaverage policy limits of ?130 million compared to ?58 million forcompanies without U.S. exposure.

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The Advisen analysis found that D&O insurance capacity isabundant, with coverage limits up to ?300 million ($423 million)readily available with financial firms the exception.

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According to the study there is a "global glut of insurancecapacity across all lines of commercial insurance," but four yearsof falling rates, bad 2008 catastrophe losses and loweredinvestment income for insurers "portends higher premiums for everytype of commercial insurance."

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The report said corporate management in the U.K. and continentalEurope "are increasingly exposed to lawsuits," heightenedshareholder activism and new laws permitting collective legalaction.

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"What was once perceived as a U.S. problem--'class action'lawsuits by disgruntled shareholders--has spread rapidly throughoutthe world. The plaintiff-friendly U.S. legal system, with itsliberal class action mechanism, makes U.S. federal courts thepreferred venue for pursuing shareholder suits for plaintiffsacross the globe," it advised.

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The survey, the first of its kind, will be followed by looks atother lines.
AIRMIC Chief Executive John Hurrell said, "Whilst the individualcircumstances of each organization will differ, the information isenough to give buyers a good starting point in their negotiationswith underwriters."

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Tom Ruggieri, Advisen president and chief executive officer,said, "UK companies and their directors are increasingly exposed tosuits by shareholders and other stakeholders. Good benchmarkingdata enables risk managers to make better informed decisions abouttheir D&O insurance programs."

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The report can be purchased online for $150 at http://corner.advisen.com/reports_airmic_DO_June09.html.

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