Protecting Insurance Directors and Offi cers


Most insurers obtain D&O coverage for their top executives and board members. Coverage for most is plentiful, but there are exceptions.


In the late ‘80s the total market available for an insurance company for D&O was only $8 to $15 million of total market capacity. Today we sit at $1.2 billion of market capacity and 50- plus markets all writing D&O.


Tracy Forst, Aon


Insurance professionals associated with companies that become impaired or fail outright face a range of possible liability exposures, including claims and lawsuits. Those running insurance organizations usually obtain directors and offi cers coverage.


Claims against D&O policies are less frequent in the insurance industry than in the broader fi nancial services market, Tracy Forst of Aon said. By comparison, 40% of the fi nancial institutions on the S&P 500 got sued in 2008. Most of those were banks.


“As the dust has settled over the last six months, it’s turned out that insurance companies have fared very well in the D&O market compared to some of the fi nancial institutions,” Forst said.


Capacity remains plentiful throughout the broader commercial market and in the directors and offi cers sector. Availability for D&O coverage has continued to widen, Forst said. Most insurers are considered good underwriting risks, although carriers are leery of writing sectors directly affected by the real estate crisis, including mortgage guarantee and title insurers.


Most directors and offi cers in the insurance industry are covered by liability insurance; Forst estimates that about 95% of those eligible are covered. Those who don’t seek coverage are likely with organizations that are prepared to fund their defense if required.


Copyright © 2010 by A.M. Best Company, Inc. All rights reserved. No part of this report may be reproduced, stored in a retrieval system or transmitted in any form or by any means; electronic, mechanical, photocopying, recording or otherwise.


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