D&O premiums fall 19% in first quarter
The average directors’ and officers’ liability premium fell 19% in the first quarter, according to a benchmarking survey of members of the Risk and Insurance Management Society.
While the D&O price decrease was the biggest recorded by the survey for any line of property and casualty insurance, many other types of coverage seemed headed for the bargain basement as well. Workers’ compensation, for example, dropped 11% in the first quarter.
Why the drop in premiums? David Bradford, editor-in-chief of Advisen, a risk-data analysis firm that conducted the survey, offered his opinion. “The industry has just been so profitable that even the hurricanes in 2005 couldn't hurt its profitability. In a certain sense, the insurance industry is a victim of its own success.”
D&O prices have fallen largely because of mild losses in suits against officers and directors, according to the report. Securities class-action suits “fell off dramatically in 2005 and 2006,” with little recent resurgence. Even subprime lawsuits have been limited to the financial services segment.
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LAST UPDATED 4/9/2008