More publicly traded companies increased their directors-and- officers liability-insurance limits through the third
quarter of this year compared to
the past four years, a trend driven
by the soft market and increased
regulatory scrutiny, according to
a report from insurance broker
Marsh.
In its “Marsh Insights:
Benchmarking Trends—D&O
Limit Levels Increased in 2011,” the
broker says close to 34 percent of all
publicly traded companies increased
D&O liability-insurance limits so far
this year while slightly more than 2
percent lowered their limits.
The figures mark the first dramatic change in limits purchased
since 2008, when slightly more
than 24 percent of buyers increased
their limits and 4 percent lowered
their limits.
Marsh notes multiple reasons
for the increase in purchasing limits:
The D&O market remains
soft for the eighth-straight quarter.
Average primary rates in the third
quarter of 2011 decreased 5. 5 per-
cent and total program rates have
dropped an average in excess of 6
percent.
“For the immediate future, Sheehan believes that the market
will continue to be soft,
despite the fact that the
decline has slowed.
we’ll still see a soft
market, especially in
excess layers.”
Tripp Sheehan,
U.S. D&O practice leader,
Marsh
cap companies are increasing their
D&O limits in greater numbers.
More than 40 percent of companies
with market capitalization of at
least $2 billion increased their lim-
its. Only 18 percent of companies
with a market cap of $301 million
or less did the
same.
None of the
large-cap compa-
nies lowered their
limits, says Marsh.
The trend is
likely to persist as
the regulatory envi-
ronment becomes
increasingly active,
Marsh says.
Tripp Sheehan,
Marsh’s U.S. D&O
practice leader says
he is not surprised by the numbers.
He believes public corporations
that sought savings during the
financial crisis in 2009 and 2010,
are now in a position to spend
more for D&O coverage in the face
of what they see as increased expo-
sure from federal regulation.
He does not believe any one
factor is compelling clients to pur-
chase more, but does feel the com-
bination of increased regulation
and affordability for the insurance
are driving buying decisions.
Hartford Offers Cover for
Small-Business Data Breaches
By Chad Hemenway
Cyber-risk coverage has become increasingly hot with news of data breaches, but these
attacks on personal information
are not limited to large companies.
According to a recent study, many
breaches occur at small businesses
with less than 100 employees.
To respond to the demand,
Hartford has expanded its cyber-risk coverage to include data-breach coverage designed for small
businesses.
“So far the feedback from our
agencies has been positive, and
we’ve learned the awareness of
this is not pronounced,” says Holly
Moriarty, marketing director for
“response is criti- cal and it could be complicated, with
different regulations
requiring different
responses in each
state.”
to help comply with
regulations and customers’ concerns,
such as how to notify
customers, craft letters and perform
credit monitoring.
“Customers are
important to any
business, but with
small business, many
times they think
of their customers
as extended family,” Moriarty says.
“Relationships are formed. You
know their names and faces. They
don’t want to jeopardize that rela-
tionship.”
Hartford has partnered with
Hartford small com-
mercial insurance.
Holly Moriarty, marketing
director for Hartford small
commercial insurance
Identify Theft 911 to provide policyholders with risk-management
advice to protect against data
breaches, Moriarty adds.
The coverage could be beneficial to restaurants and retailers
as well as businesses that store client or patient data, like those in
healthcare, financial or professional
services.
According to a report by
Verizon, of 760 data breaches analyzed in 2010, nearly two-thirds
involved businesses with less than
100 employees.
The report finds that breaches
typically do not require a high
degree of sophistication and victims are a target of opportunity
rather than choice. J
