“Many countries do not permit non-admitted D&O insurance policies to cover local directors and officers,” said Michael Turk, senior consultant, in a press release. “In these countries, the non-admitted worldwide U.S. D&O policy is not permitted to pay claims, regardless of the policy language.” As a result, Towers Perrin said, the worldwide U.S. D&O policy does not provide the global protection that many insureds may believe they have with their D&O policy.
Other complications include the need to allocate insurance premiums in some countries and pay local premium taxes, according to the press release. “A company needs to consider its own distinct situation in each country and its local laws to determine how it wants to structure their D&O insurance program to cover its global risks,” Turk said.
The 2007 Survey on Insurance Purchasing and Claims Trends also found that while most participants reported they had not purchased Independent Directors Liability (IDL) policies, 30% of private companies and 21% of public firms indicated they were at least considering it. Interest in IDL policies was strongest for companies with assets of up to $400 million.
D&O Premiums and Coverage
Premiums for D&O policies were down in 2007, as repeat participants reported an average decline in premiums of 14%, compared to a 4% decline the previous year. Repeat participants with assets of more than $10 billion reported a 41% decline.
Sixty-one percent of survey respondents reported an increase in coverage enhancements, compared to only 31% in 2006, and 34% reported decreased policy exclusions, versus 8% in the prior year.
In addition, the survey found 37% of survey participants purchase fiduciary liability coverage. These participants were split roughly in half between those that purchased a stand-alone fiduciary liability policy and those that obtained this coverage through their D&O policy.
The Towers Perrin survey included 2,927 participants – 43% of whom indicated their firms are global.