Stabilizing economy eases directors and officers liability claims and pricing
Pricing for directors’ and officers’ liability insurance decreased 2.7% in the third quarter of 2009 compared to the rates seen in the third quarter of 2008, according to Aon’s Q3 Quarterly D&O Pricing Index.
According to the Index, D&O pricing for the standard & poor’s financial institutions sector, which saw double-digit increases in each of the previous four quarters, increased by 3.2% in Q3 ’09, reflecting a 39% drop from its highest point in 2003. Other industry sectors decreased 4.9% in the third quarter.
Aon notes the slowdown in claims against financial companies came after stock market recovery. In the first three quarters of 2009, there were 130 federal securities class action lawsuits filed, 49 related to the credit crisis. This marks a 20% decrease from the 163 filings seen during the same period in 2008.
Mike Rice, national practice leader of Aon’s Financial Services Group and author of the Quarterly D&O Pricing Index, said: “The decreasing number of claims may signal an end to the litigation explosion for financial services firms. In 2010, we expect the market for D&O coverage to continue to soften for financial institutions as well as most of the other industry sectors.”