Directors and officers are asking more about their insurance coverage, and being charged more for it, according to a survey by Towers Watson.
After all, the worries of directors and officers are shared by insurance carriers offering coverage to them to protect against a "much wider range of claimants than in past years," says Larry Racioppo, vice president of Towers Watson's executive liability group, in a statement.
"Increasing D&O and employment litigation, coupled with inadequate pricing and retentions in the private and nonprofit [D&O] space, are all driving insurers' need for pricing increases," Racioppo adds.
Forty-one percent of private/nonprofits reported an increase in D&O premiums in 2012, according to the survey. Nearly 30 percent of public companies said the same for 2012.
Towers Watson says 325 D&O insurance buyers—a majority of which were large organizations with assets of more than $1 billion—participated in the survey. About 60 percent are public companies.
The top three D&O concerns among survey respondents are regulatory claims, direct shareholder/investor suits, and derivative shareholder/investor suits.
"The increased concern over regulatory litigation may reflect new laws put in place since the financial crisis, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as an increase in whistleblower bounties," says Racioppo.
Many directors and officers are asking about coverage in 2012. Towers Watson says 70 percent of private/nonprofit companies received inquiries from directors and officers about the amount and scope of the organization's D&O coverage. That's a 12 percent increase over the prior year.
Directors and officers of public companies continued a trend of making sure they knew about the D&O coverage. Eighty percent of public companies say they got inquiries, says Towers Watson.
Of the pool surveyed, 36 percent reported D&O claims in the last 10 years, with a majority—63 percent—of nonprofit organizations reporting a claim within that span.
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