Towers Watson Directors and Officers Liability: 2011 Survey of Insurance Purchasing Trends
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The 2011 Directors and Officers (D&O) Liability Survey tracks D&O coverage purchasing patterns. This 33rd in a series of studies conducted by Towers Watson provides organizations with critical ...

The 2011 Directors and Officers (D&O) Liability Survey tracks D&O coverage purchasing patterns. This 33rd in a series of studies conducted by Towers Watson provides organizations with critical structure and cost information for D&O insurance programs.

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Towers Watson Directors and Officers Liability: 2011 Survey of Insurance Purchasing Trends Document Transcript

  • 1. Directors and Officers Liability Survey 2011 Summary of Results
  • 2. Directors and Officers Liability Survey2011 Summary of ResultsTable of ContentsIntroduction 2 Excess D&O Insurance 15 Figure 26: Excess limits 152011 Survey Highlights 3 Figure 27: Most important aspects of excess insurer versus primary D&O insurer 15Participant Profile 4 Figure 1: Participation by business class 4 Side A Only 16 Figure 2: Participation by ownership 4 Figure 28: Excess Side A coverage 16 Figure 3: Participation by size — Total revenues 5 Figure 29: Impetus for purchase of excess Side A policy 16 Figure 4: Participation by size — Total assets 5 Figure 30: Excess Side A coverage by asset size — Private organizations only 16 Figure 5: Participation by size — Market capitalization 5 Figure 31: Excess Side A coverage by market Figure 6: Number of participants by size 6 capitalization — Public organizations only 17 Figure 7: International operations by ownership 6 Figure 32: Amount of excess Side A limits purchased Figure 8: International local policy purchases 6 by asset size 17 Figure 9: Purchase of local policies by asset size 7 Figure 33: Amount of excess Side A limits purchased by asset size — Private organizations only 17 Figure 10: D&O inquiries 7 Figure 34: Amount of Side A limits purchased by market Figure 11: Prevalence of independent policy review 7 capitalization — Public organizations only 17Policy Limits 8 Claims 18 Figure 12: Total limits by asset size 8 Figure 35: D&O claims during the last 10 years 18 Figure 13: Total limits by asset size — Figure 36: D&O claims in the last 10 years by ownership 18 Private organizations only 8 Figure 37: D&O claims in the last 10 years by asset size 18 Figure 14: Total limits by asset size — Public organizations only 9 Figure 38: Types of claims in the last 10 years 19 Figure 15: Total limits by market capitalization — Figure 39: Types of claims in the last 10 years by Public organizations only 9 ownership 19 Figure 16: Total limits by business class 10 Figure 40: Satisfaction with handling of D&O claim 20 Figure 17: Change in total limits of liability in Figure 41: Top D&O liability concerns 20 D&O insurance program 10 Appendices 21 Figure 18: Change in limits of liability for primary D&O policy 11 Appendix A: D&O Libility Survey — Insurance Market Summary 21 Figure 19: Change in premium paid for primary D&O policy 11 Appendix B: Insurance Placement, Reinsurance Intermediary Services and Insurance Program Reviews 36Primary D&O Insurance 12 Figure 20: Primary D&O insurance program structure 12 Figure 21: Primary D&O insurance program structure by ownership 12 Figure 22: Primary limit shared or blended with other coverages 13 Figure 23: Independent director liability 13 Figure 24: Number of endorsements on primary D&O insurance policy 13 Figure 25: Most important aspects of D&O insurance coverage 14 Directors and Officers Liability Survey: 2011 Summary of Results 1
  • 3. Introduction Welcome to the 2011 Directors and Officers (D&O) Liability Survey, the 33rd in a series of studies conducted by Towers Watson. The 2011 survey was conducted online from October 18 through November 28, 2011. A total of 401 organizations that purchase D&O liability insurance participated in the survey. Consistent with last year, the respondents in this survey were insurance buyers. In an effort to provide more meaningful data, we broke several of our responses into two respondent categories, public and private/nonprofit. Where appropriate, and when we felt the information conveyed a material change, we also included comparisons to the 2010 survey. From traditional securities class action litigation, M&A-related activity, derivative actions, or threats from a wide range of regulatory or law enforcement agencies, directors and officers — and the companies they represent — are under scrutiny from a wide array of potential claimants. Moreover, the costs to defend these lawsuits continue to escalate. It is against this backdrop that we continue to focus our survey on the purchasing patterns surrounding D&O coverage. Our survey did not capture information about other lines of coverage (e.g., employment practices liability and fiduciary liability). Similar to previous years, we have also provided a directory of insurers that write D&O coverage. Sincere thanks once again to those who participated in this year’s survey, as well as to Dan Bailey of Bailey Cavalieri, and Kevin LaCroix of OakBridge Insurance Services for their continued contributions to this survey. It is because of your support and participation that we are able to offer this unique report on D&O liability insurance. We hope you enjoy reading our report as much as we have enjoyed putting it together. Lawrence A. Racioppo Executive Liability, Towers Watson larry.racioppo@towerswatson.com2 towerswatson.com
  • 4. 2011 Survey Highlights•• 25% of public companies and 14% of private/ •• Twice as many respondents (20%) consider nonprofit respondents indicated that they pricing the most important factor when selecting increased the total limits of liability in their D&O an excess insurer, compared with 10% of program at renewal. respondents that consider pricing the most important factor when choosing a primary insurer.•• Regulatory claims once again topped the list of top three D&O liability concerns, with an 81% •• Nearly 20% of respondents that reported having response rate, edging out 2010’s 78% response. a D&O claim were dissatisfied with the insurers’ handling of their claims.•• The number of directors and officers who inquired about the amount and scope of coverage •• Less than half (47%) of respondents conducted increased significantly in 2011. Over two-thirds an independent review of their D&O policies in (69%) made an inquiry in 2011, compared with the past two years. 57% in 2010. •• All dollar amounts reported are in U.S. dollars.•• 18% of private organizations reported an increase in their primary D&O policy premium, though the increase is partly attributable to the fact that 11% reported a limit increase.•• The scope of coverage for directors was considered the most important aspect of an organization’s D&O program, yet very few firms actually purchased insurance dedicated to independent/outside directors. Directors and Officers Liability Survey: 2011 Summary of Results 3
  • 5. Figure 1. Participation by business class0% 5% 10% 15% 20% Participant ProfileAerospace and Defense The 401 respondents in our 2011 survey represent 2 all major industries and service sectors. TheAutomobiles and Transport Equipment top three business classes represent 43% of all 1 participants. The financial services — insuranceCharities and Nonprofits sector had the largest showing, with an 18% 3 participation rate, followed closely behind byCommunications manufacturing, with a 14% showing. Rounding 4 out the top three were respondents in the energyEnergy and Utilities and utilities business sector (11%). The next tier 11 of respondents had an 8% share, with a 3% rateFinancial Services, excluding Insurance shared by five sectors (Figure 1). 8Financial Services — Insurance Public companies garnered the largest share of 18 respondents (56%) when broken out by ownership,Food Beverage compared with 22% for private companies, and 16% 3 for charities and nonprofits (Figure 2).Government and Education 6 Figure 2. Participation by ownershipHealth Care, excluding Pharmaceuticals 8 6%Health Care — Pharmaceuticals 1 16% 56% PublicHigh Technology 22% Private 3 16% CharitiesManufacturing 56% and nonprofits 14 22% 6% OtherNatural Resources 4Professional and Business Services 3Property and Construction 1Retail and Wholesale 5Transportation 3Other 24 towerswatson.com
  • 6. Excluding charities and nonprofits, the largest group Figure 3. Participation by sizeof respondents — representing roughly a third of all Total revenuesparticipants, whether measured by total revenues, 0% 10% 20% 30% 40%total assets or market capitalization — was onceagain in the $1 billion – $4.9 billion range (Figures 3, $10 billion or more4 and 5). 19 $5 billion to $9.9 billionThis group of companies had an average size of 16$4.25 billion in revenues, with 19% posting revenue $1 billion to $4.9 billionof $10 billion or more and 14% reporting total 34revenue of less than $250 million (Figure 3). $500 million to $999 millionWhen measured by total assets, respondents 9averaged $5.07 billion, with a full 30% claiming $250 million to $499 million$10 billion or more and 10% reporting less than 8$250 million (Figure 4). Less than $250 million 14Total market capitalization averaged $5.3 billion,with 30% reporting $10 billion or more and a smaller Average: $4,254 million n=325 (excluding charities and nonprofits)5% reporting less than $250 million (Figure 5). Figure 4. Participation by size Total assets 0% 10% 20% 30% 40% $10 billion or more 30 $5 billion to $9.9 billion 13 $1 billion to $4.9 billion 33 $500 million to $999 million 8 $250 million to $499 million 6 Less than $250 million 10 Average: $5,070 million n=314 (excluding charities and nonprofits) Figure 5. Participation by size Market capitalization* 0% 10% 20% 30% 40% $10 billion or more 30 $5 billion to $9.9 billion 14 $1 billion to $4.9 billion 37 $500 million to $999 million 9 $250 million to $499 million 5 Less than $250 million 5 Average: $5,311 million n=197 *Public organizations only Directors and Officers Liability Survey: 2011 Summary of Results 5
  • 7. Figure 6. Number of participants by size* In reviewing the number of participants, the $1 billion — $4.9 billion group was by far the largest,0 50 100 150 with a total of 104 when measured by total assetsLess than $250 million and 110 from a revenue standpoint. This group was 30 followed by respondents with $10 billion or more, 46 represented by 95 participants when measured by$250 million to $499 million assets and 63 by revenue. The smallest grouping 20 was in the $250 million — $499 million range, with 26 20 participants in this asset range and 26 within$500 million to $999 million this revenue bandwidth (Figure 6). 25 Excluding charities and nonprofits, 56% of 29 participants indicated they have international$1 billion to $4.9 billion operations. Over two-thirds (68%) of our public 104 company respondents reported having international 110 operations. Charities and nonprofits, conversely,$5billion to $9.9 billion were far less likely to have international units, 40 with 83% without an international presence. When 51 all participants including charities and nonprofits$10 billion or more are considered, there is a reverse shift, with just 95 over half (51%) responding that they do not have 63 international operations (Figure 7). Assets Revenue Public companies indicated they are much more*Excluding charities and nonprofits likely to purchase a local policy in a foreign jurisdiction. Of the 68% of public companies with international operations, 39% responded thatFigure 7. International operations by ownership they purchase local policies. Only 17% of private Yes No companies that have international units purchase such local policies (Figure 8). Nonprofit 17% 83% Private 38% 62% Public 68% 32% All groups, excluding charities and nonprofits 56% 44% All groups (total respondents) 49% 51%Figure 8. International local policy purchasesDoes your organization have international operations? Do you purchase localpolicies in foreign jurisdictions? Private Public 17% 32% Yes, and 39% purchase 62% local policies 21% Yes, but do not purchase local policies No international 29% operations6 towerswatson.com
  • 8. Once again, the larger the company, the more likely coverage. This represents a 12% increase over 2010it was to purchase local policies. Fifty-three percent (57%), and in our view is a reflection of the level ofof all respondents purchased local policies driven concern directors and officers have in ensuring theirby companies with an asset size of $10 billion or personal assets are protected (Figure 10).more (63%), and $5 billion to $9.9 billion (59%) In spite of a heightened interest in coverage, the(Figure 9). These results continue to demonstrate the majority of companies participating in the surveystrides organizations have made in understanding (53%) have not conducted an independent reviewthe complexities and exposures when conducting of their policies in the past two years. Of thosebusiness outside of the United States. Moreover, participants that conducted a review, 45% completedthey also signify the importance of all insurers being the process through a law firm and 36% through aable to offer a product to address such exposures. broker (Figure 11).Interestingly, more respondents reported receivingan inquiry about their level of D&O coverage. Duringthe past 12 months, 69% of respondents’ directorsor officers asked about the amount and scope ofFigure 9. Purchase of local policies by asset size Yes No Less than $250 million 0% 100% $250 million to $999 million 35% 65% $1 billion to $4.9 billion 55% 45% $5 billion to $9.9 billion 59% 41% $10 billion or more 63% 37% All size groups, excluding charities and nonprofits 54% 46% All groups (total respondents) 53% 47%Figure 10. D&O inquiries Figure 11. Prevalence of independent policy reviewDuring the past 12 months, has a director or officer of your In the past two years, have you conducted an independentcompany inquired as to the amount and scope of coverage? review of your D&O liability policy? 2011 21% Yes, through a law firm 21% 17% Yes, through 31% another broker 8% Yes, through a 53% consultant 69% 17% 1% Yes, through another third party 8% 53% No Yes 1% No 2010 43% 57% Directors and Officers Liability Survey: 2011 Summary of Results 7
  • 9. Policy Limits Survey respondents represented a broad range When focusing solely on our private company of public, private and nonprofit organizations. The respondents, the average dropped substantially, average in total policy limits for respondents, excluding to $36.3 million. Again, the average was bolstered charities and nonprofits, was $98 million. When considerably by larger private company respondents. all participants were considered, the average limit Those with $10 billion or more averaged $135 million dropped to $86.9 million. Companies with $10 billion in total policy limits, and those in the $5 billion – $9.9 or more in assets reported average limits of $187.5 billion category reported $63.3 million (Figure 13). million, and those with assets of between $5 billion and $9.9 billion reported an average of $115.1 million in total limits (Figure 12). “Survey respondents represented a broad range of public, private “ and nonprofit organizations.” Figure 12. Total limits by asset size Participants First Third reporting quartile Median quartile Average Less than $250 million 30 $ 5.0 $ 10.0 $ 15.0 $ 11.9 $250 million to $999 million 45 10.0 25.0 50.0 32.8 $1 billion to $4.9 billion 104 28.2 55.0 100.0 64.8 $5 billion to $9.9 billion 40 75.0 120.0 150.0 115.1 $10 billion or more 95 100.0 175.0 255.0 187.5 All size groups, excluding charities and nonprofits 333 250.0 65.0 150.0 98.0 All groups (total respondents) 399 $ 20.0 $ 50.0 $125.0 $ 86.9 Figure 13. Total limits by asset size Private organizations only Participants First Third reporting quartile Median quartile Average Less than $250 million 18 $ 2.8 $ 5.5 $ 11.3 $ 8.3 $250 million to $999 million 22 10.0 10.0 20.0 16.2 $1 billion to $4.9 billion 27 20.0 30.0 50.0 35.9 $5 billion to $9.9 billion 3 55.0 60.0 75.0 63.3 $10 billion or more 10 40.0 102.5 163.8 135.0 All size groups (private organizations only) 88 $10.0 $ 20.0 $ 45.0 $ 36.38 towerswatson.com
  • 10. When turning our attention to public company $9.9 billion asset range (Figure 14). Again, the toprespondents, the average total policy limit was two respondent ranges, $5 billion – $9.9 billion, and$126.8 million, roughly four times the average for $10 billion and more, had the highest total limits,private companies. The average for companies with with respective averages of $137.5 million and$10 billion or more in asset size was $203 million, $227.4 million (Figure 15).and $123.7 million for those in the $5 billion –Figure 14. Total limits by asset sizePublic organizations only Participants First Third reporting quartile Median quartile Average Less than $250 million 10 $ 8.8 $ 12.5 $ 22.5 $ 16.7 $250 million to $999 million 20 41.3 50.0 70.0 55.0 $1 billion to $4.9 billion 69 45.0 75.0 110.0 80.6 $5 billion to $9.9 billion 35 100.0 125.0 150.0 123.7 $10 billion or more 79 110.0 200.0 300.0 203.0 All size groups 222 $ 50.0 $100.0 $175.0 $126.8 (public organizations only)Figure 15. Total limits by market capitalizationPublic organizations only Participants First Third reporting quartile Median quartile Average Less than $250 million 10 $ 8.8 $ 15.0 $ 35.0 $ 25.7 $250 million to $499 million 9 27.5 40.0 65.0 47.8 $500 million to $999 million 17 45.0 60.0 72.5 65.5 $1 billion to $4.9 billion 73 60.0 100.0 122.5 96.3 $5 billion to $9.9 billion 28 101.3 127.5 190.0 137.5 $10 billion or more 60 160.0 200.0 300.0 227.4 All size groups 222 $ 50.0 $100.0 $175.0 $126.8 (public organizations only) Directors and Officers Liability Survey: 2011 Summary of Results 9
  • 11. Once again, a significant portion of all public insurance program increased in 2011 over 2010 and private companies participating in the (Figure 17). Last year we reported as a “combined” survey reported increasing the total limits of figure, which showed 21% had increased their D&O liability in their D&O program. A quarter of public limits. The wide range of exposures facing directors companies indicated that they increased their D&O and officers continues to play a major role in the insurance coverage, while 14% of private/nonprofit purchasing decision. organizations indicated that the limits in their D&O Figure 16. Total limits by business class Participants First Third reporting quartile Median quartile Average Aerospace and Defense 8 $10.0 $ 50.0 $220.0 $101.3 Automobiles and Transport Equipment 4 77.5 140.0 412.5 210.0 Charities and Nonprofits 13 7.5 10.0 40.0 22.6 Communications 15 72.3 150.0 200.0 145.5 Energy and Utilities 46 93.8 140.0 200.0 148.4 Financial Services, excluding Insurance 32 20.0 29.0 90.0 80.8 Financial Services — Insurance 70 10.0 25.0 71.3 62.6 Food and Beverage 10 48.8 92.5 131.3 93.0 Government and Education 23 5.0 15.0 30.0 24.3 Health Care, excluding Pharmaceuticals 32 11.3 30.0 75.0 46.5 Health Care — Pharmaceuticals 6 43.8 97.5 212.5 118.3 High Technology 12 68.8 137.5 225.0 159.6 Manufacturing 56 41.3 75.0 136.3 87.7 Natural Resources 15 20.0 60.0 120.0 105.0 Professional and Business Services 10 10.0 17.5 42.5 31.5 Retail and Wholesale 20 30.0 60.0 123.8 87.8 Transportation 13 35.0 70.0 117.5 93.8 Other 14 18.8 67.5 125.0 97.0 All business classes (total respondents) 399 $20.0 $ 50.0 $125.0 $ 86.9 Figure 17. Change in total limits of liability in D&O insurance program Compared to your previous D&O insurance program, have the total limits of liability in your D&O insurance program increased, decreased or stayed the same? Private/Nonprofit Public 3% 1% 1% 14% 5% 25% Increased Stayed the same Decreased Not sure 82% 69%10 towerswatson.com
  • 12. Public companies were slightly more likely to change private/nonprofit. However, more private/nonprofitstheir primary D&O policy limits. For instance, 13% experienced a slightly greater increase in premiumsof public companies increased coverage, compared (18%) compared with public companies (14%). Thewith 11% for private/nonprofits. A decrease was 18% figure is particularly noteworthy when viewed inposted by 3% of public companies and 1% of conjunction with Figure 18. Only 11% (of the 18%)private/nonprofits (Figure 18). can be attributable to a primary limit increase, which is interesting, as it signals a potential hardening inThe majority of both public and private respondents the private/nonprofit segment with insurers lookingreported a change in premium paid for their primary to drive rates (Figure 19).D&O policy, though more were able to achievea pricing decline — 62% for public and 35% forFigure 18. Change in limits for primary D&O policyCompared to your previous primary D&O policy, has your D&O limitincreased, decreased or stayed the same? Private/Nonprofit Public 1% 3% 1% 11% 13% Increased Stayed the same Decreased Not sure 88% 83%Figure 19. Change in premium paid for primary D&O policyCompared to your previous D&O policy, did the premium paid for yourprimary insurance policy increase, decrease or stay the same? Private/Nonprofit Public 1% 1% 14% 18% 35% Increased Stayed the same 23% Decreased 62% Not sure 46% Directors and Officers Liability Survey: 2011 Summary of Results 11
  • 13. Primary D&O Insurance Consistent with last year, the majority of participants Nonprofit (32%) and private (19%) organizations in the 2011 survey (60%) reported a primary were also far more likely to respond that they program structure inclusive of traditional Side were not sure how their primary D&O program was A/B/C coverage. Twenty percent of organizations structured, compared with their public company conveyed a Side A/B structure. Once again, only 6% counterparts (5%). While this represents a slight of respondents reported maintaining a Side A-only improvement over the 2010 figures, insurance structure (Figure 20). brokers and management liability consultants need to continue educating the private and nonprofit buyer about their D&O coverage (Figure 21). Figure 20. Primary D&O insurance program structure How is your primary D&O insurance program structured? 1% 13% 6% 20% 6% Side A only 20% Side A/B only 60% Side A/B/C 1% Other 13% Not sure 60% Figure 21. Primary D&O insurance program structure by ownership P articipants Side A/B Side A reporting S ide A/B/C only only Other Not sure Nonprofit 66 44% 17% 6% 1% 32% Private 88 49% 26% 5% 1% 19% Public 223 70% 18% 7% 0% 5% All groups (total respondents) 401 60% 20% 6% 1% 13%12 towerswatson.com
  • 14. “Private companies and “ Figure 22. Primary limit shared or blended with other coverages Is your primary D&O limit shared or blended with other coverages (e.g., EPL, fiduciary)? nonprofits are more likely to share or blend ancillary expo- Private/Nonprofit 1% Public 2% sures than public companies.” 14% Yes 44% Private companies and nonprofits are more likely No to share or blend ancillary exposures than public Not sure 55% companies. A notable 44% of private companies and nonprofits share or blend their D&O program 84% with other coverages, such as employment practices liability (EPL) or fiduciary liability policies. Far fewer public companies (14%) reported using such a strategy (Figure 22). Figure 23. Independent directorship liability (IDL) While the vast majority of survey participants do Does your organization purchase D&O liability insurance not purchase D&O liability insurance that covers that covers only independent/outside (excluding inside) directors? only independent/outside directors, public Private/Nonprofit Public companies are more likely to buy such coverage, 1% 1% or to at least consider the option. Seven percent 7% of public companies purchased insurance for 10% independent directors, compared with 1% of Yes private/nonprofits. Another 10% are considering No but considering this additional coverage (Figure 23). No and not considering Brokers and risk professionals continually work towards creating comprehensive D&O programs 83% 98% that provide best in class coverage. As such, it is not uncommon to have multiple enhancement endorsements added to a policy. Careful consideration should be given when drafting Figure 24. Number of endorsements on primary D&O insurance policy such language. At times, multiple “enhancement How many endorsements are on your primary D&O insurance policy? endorsements” may be added to a policy that modifies the same policy provision(s). Conflicting Private/Nonprofit Public language within the endorsements may present issues in the event of a claim. This phenomenon prompted Towers Watson to ask respondents about 19% 14% 4% the number of endorsements on their primary D&O 29% 2% 38% Less than 10 policy. Generally speaking, it is certainly reasonable 7% Between 10 and 20 for a primary D&O policy for a public company to 6% Between 21 and 30 contain more endorsements than that of a private/ 10% 13% Between 31 and 40 nonprofit organization. Regardless of the number More than 40 of endorsements on a given policy, all policies and 25% 33% Not sure endorsements should be carefully reviewed to avoid any conflicting language that could add needless complexity when faced with a claim (Figure 24). Directors and Officers Liability Survey: 2011 Summary of Results 13
  • 15. When asked about the most important aspects of suggested that the scope of coverage available to D&O coverage, respondents from public and private/ directors was their primary focus, very few actually nonprofit companies were in agreement — with the purchased insurance dedicated to independent/ scope of coverage for directors leading the way outside directors, as reported in Figure 23. As a with 75% and 50%, suggesting this was the most practical matter, the D&O purchasing decision is important aspect of their companies’ D&O coverage. oftentimes made within the risk management or These figures far outweighed those that reported similar function inside an organization. As a result, protecting the needs of corporate officers (7% and all constituents (directors, officers and the 6%, respectively) or protecting the organization organization itself) are often considered when (12% and 29%, respectively) as most important constructing a D&O program (Figure 25). (Figure 25). What is most interesting about the figures above is that although the vast majority of respondents Figure 25. Most important aspects of D&O insurance coverage Ranking for aspects of D&O insurance coverage on a scale of 1 to 4, where 1 is most important and 4 is least important (top three rankings) Private/Nonprofit 45 0% 20% 40% 60% 80% 100% Scope of coverage for directors 25 50 32 12 94 Scope of coverage for officers 23 6 50 36 92 Scope of coverage for the company 29 10 39 78 Competitive pricing 15 7 14 36 18 Public 16 45 0% 20% 40% 60% 80% 100% Scope of coverage for directors 75 17 6 98 Scope of coverage for officers 7 72 16 95 Scope of coverage for the company 12 8 48 68 Competitive pricing 5 4 30 39 18 Ranked first Ranked second Ranked third 5 49 45 6 25 47 9 23 50 7 8 27 3914 towerswatson.com
  • 16. Excess D&O InsuranceOver three-quarters of respondents (77%) indicated Figure 27. Most important aspects of excess insurer versus primary D&O insurerthat, in addition to primary D&O coverage, excess Rank the following aspects of your excess insurer on a scale of 1 to 6, where 1 is most important and 6 is least important (top three rankings).limits are purchased through at least one additionalinsurer (Figure 26). Primary D&O insurerThe most important aspects of D&O insurers were 0% 20% 40% 60% 80% 100%ranked in the same order by both primary andexcess purchasers, with financial strength, breadth Financial strengthof coverage offered and pricing rounding out the top 36 22 19 77three. However, the degree of importance for each Breadth of coverage offereddiffered somewhat. For instance, while an insurer’s 34 25 18 77financial strength ranked as the most important Competitive pricingcomponent for both primary and excess insurers, 10 18 26 54breadth of coverage offered by a primary insurer Claims paying reputationranked as most important for 34% of respondents, 22 52 11 18with pricing the most important factor only 10% of Knowledge/understanding of your businessthe time. However, when considering their excess 9 12 13 34insurer, the importance of pricing doubled, with Volume of D&O premium written20% of respondents reporting that price was of 4 2 6greatest importance. The fact that organizationsare more inclined to select an excess insurer onpricing foremost is noteworthy. Selecting excess Excess insurerinsurers based on pricing can be dangerous. In fact, 0% 20% 40% 60% 80% 100%we have seen many examples over the past fewyears whereby poorly constructed excess programs Financial strengthhave made excess D&O coverage inaccessible to 39 26 17 82companies. Pricing, while important, should be Breadth of coverage offeredconsidered only after a careful review of the breadth 25 24 20 69of coverage offered (Figure 27). Competitive pricing 16 20 22 25 67 Claims paying reputationFigure 26. Excess limitsIn addition to your primary D&O limit, are excess 12 18 23 53limits purchased through at least one additional insurer? Knowledge/understanding of your business 3 9 11 23 Volume of D&O premium written 23% 11 4 6 77% Yes Ranked first Ranked second Ranked third 23% No ycilop ssecxe na gnisahcrup esohT :esab rerusni ssec=E 903 x n 77% Directors and Officers Liability Survey: 2011 Summary of Results 15
  • 17. Figure 28. Excess Side A coverageDid your organization purchase an excessSide A or Side A DIC policy? Side A Only Fifty-seven percent of respondents purchased an 10% excess Side A or Side A difference-in-conditions (DIC) policy (Figure 28). When asked what was the 57% Yes main impetus driving the purchase decision, 71% 33% No cited breadth of coverage, a significant increase 33% 57% 10% Not sure over the 45% response in 2010. Such a meaningful increase demonstrates that organizations understand the myriad benefits a comprehensive Side A program offers. Protection against bankruptcy, both for the underlying insurer and for the respondent’s organization, also experienced a sizable increase in responses, with 15% and 12% increases,Figure 29. Impetus for purchase of excess Side A policy respectively (Figure 29).What was the main impetus for the purchase of the excess Side A policy?0% 10% 20% 30% 40% 50% 60% 70% 80% As you might expect, the larger the organization, the more likely it is to purchase Side A coverage.Breadth of coverage For private organizations specifically, the majority 71 of firms with total assets in excess of $1 billion 45 purchased excess Side A coverage. Conversely, overConcern about large loss three-quarters of smaller firms with under $250 47 million in assets reported not doing so (Figure 30). 45 From a market capitalization standpoint, over three-Protection against bankruptcy of underlying insurer quarters of public company respondents (78%) 42 purchased excess Side A coverage, and purchase 27 of this coverage was well represented irrespectiveProtection against bankruptcy of your organization of size (Figure 31). 40 28 For all respondents, the average amount of excess Side A limits purchased was $46.1 million. TheBoard member required it largest average of $92.5 million was represented 24 29 by companies with $10 billion or more in assets (Figure 32). The average limit for all privatePremium savings organizations was more modest at $19.8 million 10 (Figure 33). When measured by market capitalization, 9 the average for 174 public companies was $54.6Other million, with larger companies (in the $10 billion-plus 6 range) posting an average of $114.6 million 8 in excess Side A limits purchased (Figure 34). 2011 2010 18Figure 30. Excess Side A coverage by asset size 15Private organizations only 8 Participants reporting Yes No Not sure 15 Less10 $250 million than 18 5% 78% 17% $250 million to $999 million 22 27% 50% 23% $1 billion to $4.9 billion 27 52% 48% 0% 15 $5 billion to $9.9 billion 13 3 67% 33% 0% $10 billion or more 10 60% 30% 10% All size groups 10 88 34% 55% 11% (private organizations only) 516 towerswatson.com 10 8
  • 18. Figure 31. Excess Side A coverage by market capitalizationPublic organizations only Participants reporting Yes No Not sure Less than $250 million 10 50% 30% 20% $250 million to $499 million 9 78% 11% 11% $500 million to $999 million 17 82% 18% 0% $1 billion to $4.9 billion 73 82% 17% 1% $5 billion to $9.9 billion 28 93% 7% 0% $10 billion or more 60 78% 20% 2% All size groups (public organizations only) 223 78% 18% 4%Figure 32. Amount of excess Side A limits purchased by asset size Participants First Third reporting quartile Median quartile Average Less than $250 million 6 $ 8.8 $10.0 $ 16.3 $11.7 $250 million to $999 million 24 10.0 12.5 23.8 16.5 $1 billion to $4.9 billion 70 10.0 15.0 25.0 22.4 $5 billion to $9.9 billion 31 25.0 30.0 50.0 37.1 $10 billion or more 74 30.0 70.0 101.3 92.5 All size groups, excluding 215 10.0 25.0 50.0 48.2 charities and nonprofits All groups (total respondents) 231 $10.0 $25.0 $ 50.0 $46.1Figure 33. Amount of excess Side A limits purchased by asset sizePrivate organizations only Participants First Third reporting quartile Median quartile Average Less than $250 million 1 $20.0 $20.0 $20.0 $20.0 $250 million to $999 million 6 4.5 7.5 11.3 8.0 $1 billion to $4.9 billion 14 5.0 10.0 20.0 12.5 $5 billion to $9.9 billion 2 10.0 30.0 50.0 30.0 $10 billion or more 6 22.5 37.5 62.5 44.2 All size groups 30 $ 5.0 $15.0 $25.0 $19.8 (private organizations only)Figure 34. Amount of Side A limits purchased by market capitalizationPublic organizations only Participants First Third reporting quartile Median quartile AverageLess than $250 million 5 $ 7.5 $10.0 $ 20.0 $ 13.0$250 million to $499 million 7 10.0 15.0 20.0 16.4$500 million to $999 million 14 10.0 20.0 30.0 21.4$1 billion to $4.9 billion 60 10.0 25.0 38.8 29.6$5 billion to $9.9 billion 26 23.8 35.0 70.0 53.8$10 billion or more 47 50.0 75.0 133.1 114.6All size groups 174 $15.0 $30.0 $ 65.0 $ 54.6(public organizations only) Directors and Officers Liability Survey: 2011 Summary of Results 17
  • 19. Claims Nearly two-thirds of survey participants indicated As you might expect, larger companies were more they have not had any claims against their D&O susceptible to claim activity. Nearly half (48%) of liability policy in the last 10 years (Figure 35). participants with $10 billion or more in assets Nonprofits were most likely to report claims in the faced claims over the last decade, followed by the last 10 years (48%), followed by public companies $5 billion – $9.9 billion range, with 43% reporting (36%) and private companies (17%) (Figure 36). claims (Figure 37). Figure 35. D&O claims in the last 10 years Has your organization had any claims against its D&O liability policy during the last 10 years? 34% 34% Yes 66% No 66% Figure 36. D&O claims in the last 10 years by ownership 0% 10% 20% 30% 40% 50% Nonprofit 48 Private 17 Public 36 All groups (total respondents) 34 5 Figure 37. D&O claims in the last 10 years by asset size 5 0% 10% 20% 30% 40% 50% Less than $250 million 17 $250 million to $999 million 21 $1 billion to $4.9 billion 19 $5 billion to $9.9 billion 43 $10 billion or more 48 518 towerswatson.com
  • 20. The lion’s share of claims continues to comefrom shareholders (both direct, with 45% ofrespondents reporting these, and derivative, with42% of respondents reporting these) (Figure 38).Employment-related matters continued to be theprimary source of claims for private and nonprofitorganizations, with EPL-related claims reported by36% and 73% of these respondents, respectively(Figure 39).Figure 38. Types of claims in the last 10 yearsThose organizations having claims during the past 10 years0% 10% 20% 30% 40% 50%Direct shareholder 45 46Derivative shareholder 42 40Employment 32 30Regulatory 19 16Fiduciary 15 21Other 15 15 2011 2010Figure 39. Types of claims in the last 10 years by ownershipThose organizations having claims during the past 10 years Direct shareholder/ D erivative shareholder/ investor suit investor suit Employment-related Regulatory Fiduciary Other Nonprofit 0% 3% 73% 23% 13% 27% Private 21% 7% 36% 14% 14% 29% Public 69% 65% 15% 18% 17% 6% All groups (total respondents) 45% 42% 32% 19% 15% 15% Directors and Officers Liability Survey: 2011 Summary of Results 19
  • 21. The survey also found that nearly two-thirds (65%) Direct shareholder/investor suits once again of respondents to the 2011 survey were satisfied represented the greatest source of concern for with their insurers’ handling of their D&O claims, an respondents, with 36% citing it as their greatest increase from 56% last year. However, nearly 20% concern. However, regulatory claims once again of respondents reporting having a D&O claim were topped the list with an 81% response rate once again dissatisfied with how insurers handled (combined first, second and third rankings), a slight their claim. Such a large percentage is disappointing increase over the 78% reported in 2010 (Figure 41). and suggests that claim handling is an area that should be top of mind for insurers interested in improving their level of service (Figure 40). Figure 40. Satisfaction with handling of D&O claim How satisfied were you with your D&O insurer’s handling of the claim? Those organizations having claims during the past 10 years 2011 2010 19% 20% Satisfied Neutral Dissatisfied 16% 56% 65% 24% Figure 41. Top D&O liability concerns Ranking for the following types of claims on a scale of 1 to 5, where 1 is the greatest concern to the organization and 5 is the least concern (top three rankings) 0% 20% 40% 60% 80% 100% Regulatory 2011 21 24 36 81 2010 19 26 33 78 Direct shareholder/investor suit 2011 36 19 13 68 2010 41 16 11 68 Derivative shareholder/investor suit 2011 14 25 19 58 2010 10 24 19 53 Fiduciary 2011 10 16 23 49 2010 12 19 19 50 Employment-related 2011 19 16 9 44 2010 18 15 18 51 Ranked first Ranked second Ranked third20 towerswatson.com
  • 22. Appendix ALiability Survey Insurance Market Summary Company Contact Capacity (in millions) CommentsABA Insurance Gina Juhnke, Product Manager 2011 $15 Writes commercial banks and thrifts.Services, Inc. ABA Insurance Services, Inc. 5910 Landerbrook, Suite 100 Mayfield Heights, OH 44124 800-274-5222 e-mail: GJuhnke@abais.comACEACE Bermuda Jeffrey Jabon 2011 $50 All segments and classes of business, Senior Vice President including public, private, partnerships, Head of Professional Lines sporting organizations, not-for-profit ACE Bermuda Insurance Ltd. and financial institutions. Excess 17 Woodbourne Avenue follow-form all lines (for Side A, see P.O. Box HM 1015 CODA). Manuscript (bespoke) policies Hamilton HM 08 Bermuda available for complex risk solutions. 441-295-5200 $50 million minimum attachment. e-mail: jeffrey.jabon@ace.bm Bermuda representative and web: www.acegroup.com or international brokers. www.acebermuda.comACE International Ben Ingram, Senior Vice President 2011 $25 ACE International writes international Nicholas Small accounts, excluding U.S.- International FI Underwriting Manager headquartered corporations, with a ACE International capacity of $25 million primary or ACE Building excess. ACE will consider all classes 100 Leadenhall Street of accounts, including financial London EC3A 3BP institutions. Local underwriters and 011-44-20-7173-7972 local language policy forms in most 011-44-20-7173-7973 international countries. e-mail: ben.ingram@ace-ina.com nick.small@ace-ina.com web: www.aceltd.comACE USA Tim O’Donnell, President 2011 $25 All segments and classes of business, ACE Professional Risk including public, private, not-for-profit 140 Broadway and financial institutions. Retail New York, NY 10005 brokers. Writes on Illinois Union 646-458-7004 paper. 646-458-6880 (fax) e-mail: timothy.o’donnell@acegroup.com web: www.aceprofessionalrisk.com Directors and Officers Liability Survey: 2011 Summary of Results 21
  • 23. Company Contact Capacity (in millions) Comments CODA (Corporate Officers & Jeffrey Jabon 2011 $75 All segments and classes of business, Directors Assurance) Deputy Chairman including public, private, partnerships, Chief Underwriting Oficer sporting organizations, not-for-profit Senior Vice President and financial institutions. Side A/ ACE Bermuda Insurance Ltd. DIC (Difference-in-Conditions, “drop- 17 Woodbourne Avenue down” cover), Premier Personal Asset P.O. Box HM 1015 Protection for Directors & Officers (no Hamilton HM 08 Bermuda Corporate Reimbursement) as well 441-278-6615 as Corporate Governance exposure e-mail: jeffrey.jabon@ace.bm coverage for Independent Directors, web: www.acegroup.com or Executive Officers Only coverage, and www.acebermuda.com Retiring(ed) Director & Officer coverage; all for non-indemnified risks, global or otherwise. Manuscript (bespoke) policies available for complex risk solutions. No minimum attachment, primary Side A can be stand-alone or unique policy architecture can be structured to sit parallel to B/C cover and applicable retention-allowing CODA’s broad Side A coverage to be expanded upward throughout follow- form tower. Bermuda representative and international brokers. Westchester Specialty Joseph Casey 2011 $15 All classes. Wholesale brokers. President Professional Risk Side A $25 ACE Westchester Specialty 500 Colonial Center Parkway, #200 Roswell, GA 30076 678-795-4258 678-795-4150 (fax) e-mail: joseph.casey@acegroup.com web: www.acewestchester.com AEGIS Karen P Larson, Vice President . 2011 $35 Utilities, energy, related energy and AEGIS Insurance Services, Inc. public power. 1 Meadowlands Plaza E. Rutherford, NJ 07073 201-508-2804 e-mail: karenlarson@aegislimited.com web: www.aegislimited.com Alterra Alterra Insurance Ltd. James C. Gray, EVP & CUO 2011 $15 Excess AB, ABC, Side A and Side A DIC. Alterra Insurance Ltd. No excluded classes. Side A $25 Alterra House 2 Front Street Hamilton HM 11 Bermuda 441-296-8800 441-296-8811 (fax) e-mail: Jim.Gray@alterra-bm.com web: www.maxbermuda.com22 towerswatson.com
  • 24. Company Contact Capacity (in millions) CommentsAlterra USA Daniel G. Gamble, Managing Director 2011 $15 All classes. Alterra USA Side A $25 55 Broadway, Suite 2101 New York, NY 10006 212-898-6622 646-300-4104 (mobile) e-mail: daniel.gamble@alterra-us.comAmerican Safety Insurance Peter McKeegan, Vice President 2011 $5 (D&O and Primary or Excess: D&O/EPL/FiduciaryServices, Inc. Professional Liability Group E&O) — Public, Private, Partnerships or 101 Hudson Street, Suite 3606 Nonprofit for virtually all classes Jersey City, NJ 07302 other than Financial Institutions. Both 201-830-2264 standard and/or difficult-to-place risks 201-830-2279 (fax) considered. e-mail: peter.mckeegan@amsafety.com Miscellaneous Professional, Insurance web: www.amsafety.com Agents and Select Lawyers, Technology E&O and A&E are also available on both a Primary and Excess basis. Contact Vince.McGee@amsafety.com for E&O products.Arch InsuranceArch Insurance (U.S.) John A. Rafferty 2011 $25 All classes. One Liberty Plaza, 53rd Floor New York, NY 10006 (646) 563-6364 e-mail: jrafferty@archinsurance.comArch Insurance Bermuda Matt Smith, Vice President 2011 $25 All classes. Underwriting Manager Executive Assurance Arch Insurance Bermuda 11 Victoria Street, 4th Floor Victoria Hall P O. Box HM 129 . Hamilton HM 11 Bermuda 441-278-9268 441-278-9276 (fax) e-mail: matt.smith@archinsurance.bm web: www.archinsurance.bmAspen Insurance Group Fred Cooper 2011 $25 •• Commercial and Financial Institutions Aspen Specialty •• Primary and Excess 101 Hudson Street, 36th Floor • D&O Jersey City, NJ 07302 • Side A (646) 502-1022 • Employment Practices (646) 502-1020 (fax) • Fiduciary Liability e-mail: Fred.Cooper@AspenSpecialty.com • Private Equity web: www.aspenspecialty.com • Private Company Coverage Directors and Officers Liability Survey: 2011 Summary of Results 23
  • 25. Company Contact Capacity (in millions) Comments AWAC AWAC US (Allied World Thomas Kennedy 2011 $25 All classes. Assurance Company) Allied World Assurance Company 199 Water Street, 24th Floor New York, NY 10038 646-794-0514 646-794-0611 (fax) e-mail: thomas.kennedy@awac.com web: www.awac.com AWAC Bermuda Ed Moresco, Senior Vice President 2011 $25 All classes. (Allied World Assurance Bermuda & International Professional Company) Liability Manager Allied World Assurance Company 27 Richmond Road P.O. Box HM 3010 Hamilton HM MX Bermuda 441-278-5401 e-mail: ed.moresco@awac.com web: www.awac.com Axis Capital AXIS Insurance John A. Kuhn 2011 $25 D&O Insurance and other professional Chief Executive Officer lines coverages for publicly traded AXIS Insurance & and privately held companies of Global Practice Leader all sizes. Commercial accounts, Professional Lines financial institutions and not-for-profit AXIS Insurance organizations. U.S. underwriting 300 Connell Drive, Suite 8000 companies include AXIS Insurance P.O. Box 357 Company, AXIS Reinsurance Company, Berkeley Heights, NJ 07922-0357 and AXIS Surplus Insurance Company. 908-508-4302 In the U.S., contact John Van Decker, 908-508-4301 (fax) head of North American Professional e-mail: john.kuhn@axiscapital.com Lines, john.vandecker@axiscapital. web: www.axiscapital.com com or 908-508-4367. Outside the U.S., contact Graham Evans, head of International Professional Lines, graham.evans@axiscapital.com or +44 (0)207 877 3880. Key business unit contacts: edward.talarico@ axiscapital.com for AXIS Financial Insurance Solutions (U.S.); timothy. braun@axiscapital.com for AXIS Financial Institutions (U.S.); hillary. williams@axiscapital.com in Bermuda; and dax.qulmohamed@axiscapital. com in London.24 towerswatson.com
  • 26. Company Contact Capacity (in millions) CommentsProfessional Risk Stephen Cavallaro, Underwriting Manager 2011 $5 All classes except financialFacilities, Inc. Professional Risk Facilities, Inc. institutions and public companies. 1122 Franklin Avenue, 2nd Floor Underwriting manager/program P.O. Box 9240 administrator for C.N.A., utilizing Garden City, NY 11530 C.N.A.’s Epack and Epak Extra policy 516-408-5736 forms (D&O, EPL, Fiduciary, MPL, 516-747-6074 (fax) Crime and Technology & Privacy e-mail: scavallaro@professionalrisk.com Liability), which is admitted in all web: www.professionalrisk.net 50 states and written on Columbia Casualty Company paper. Coverage is also available for not-for-profit organizations.Beazley Group plc Tony Komro 2011 $20 Primary or excess for commercial Michael J. Schmitt risks. Issuing company: Beazley Specialty Lines Insurance Company, Inc. (option Beazley Group for non-admitted paper Syndicate 35 East Wacker Drive, Suite 3900 2623/623 at Lloyd’s) Chicago, IL 60601 312-506-1304 Tony’s office 312-506-1305 Michael’s office e-mail: anthony.komro@beazley.com michael.schmitt@beazley.com web: www.beazley.comCatlin US Catherine Cossu 2011 $15 All classes — both primary and Catlin, Inc. excess. Financial Square 32 Old Slip, 36th Floor New York, NY 10005 Catlin Insurance Company Inc. and 212-801-3400 Catlin Specialty Insurance Company e-mail: catherine.cossu@catlin.com David McDonald James Thomas Catlin, Inc. 60 State Street, Suite 1250 Boston, MA 02109 617-316-1207 e-mail: david.mcdonald@catlin.com jim.thomas@catlin.com Stephen McGill Michael Scarlata Catlin, Inc. 5700 Canoga Avenue, Suite 130 Woodland Hills, CA 91367 818-577-4100 e-mail: stephen.mcgill@catlin.com michael.scarlata@catlin.com Directors and Officers Liability Survey: 2011 Summary of Results 25
  • 27. Company Contact Capacity (in millions) Comments Chartis Financial Lines, Robert Yellen, Chief Underwriting Officer 2011 $50 All classes. a division of Chartis 175 Water Street Domestic: New York, NY 10038 Peter McKenna 212-458-3745 Head of Management Liability e-mail: 212-458-1410 robert.yellen@chartisinsurance.com web: www.chartisinsurance.com Brady Head Head of Public Company Management Liability 713-342-7513 Shelley Norman Head of Private & Nonprofit Management Liability 312-930-2460 Brian Benjamin Head of Financial Institutions 212-458-2927 Europe: Jacqueline McNamee 150 Cheapside London EC2V-6ET +44-207-651-6100 Cat Excess Liability, William Hopkins, EVP 2011 All industry classes. a division of Chartis Product Line Manager Max Full cover, Side A, Lead DIC Cat Excess Liability Available $150 32 Old Slip, 19th Floor Operating from branches New York, NY 10005 Max U.S. Domestic and International in 646-857-1147 Preferred $50 the U.S., Bermuda and e-mail: London william.hopkins@chartisinsurance.com web: www.chartisinsurance.com Chubb Robert C. Cox 2011 $25 All classes. Chief Underwriting Chief Operating Officer Officer is Jim Bronner, jbronner@ Chubb Specialty Insurance chubb.com; Specialty Products 3 Mountain View Road manager is Evan Rosenberg, Warren, NJ 07059 erosenberg@chubb.com; contact 908-903-2203 for D&O is Tony Galban, galbant@ e-mail: rcox@chubb.com chubb.com; contact for health care web: www.chubb.com Institutions is Beth Strapp, strappb@ chubb.com; contact for Financial Institutions is Rich Edsall, redsall@ chubb.com; contact for Private and Not-For-Profit Companies is Michael Maloney, mmaloney@chubb.com. Cincinnati Insurance Co. Scott Unger, Vice President & 2011 $10 D&O, Fiduciary, EPLI and Cyber (Blue Underwriting Manager Chip Policy). All classes written on Cincinnati Insurance Co. Cincinnati Insurance Co. P.O. Box 145496 NOTE: Only available through our CIC Cincinnati, OH 45250-5496 agency force. 513-870-2407 e-mail: scott_unger@cinfin.com web: www.cinfin.com26 towerswatson.com
  • 28. Company Contact Capacity (in millions) CommentsCNACNA Pro Daniel Fortin 2011 $15 All classes. Contact is Dan Auslander Senior Vice President for all not-for-profit, middle market CNA Pro Side A $25 and private businesses. Contact 333 S. Wabash, 27th Floor for financial institutions is Thomas Chicago, IL 60604 Kocaj. Contact for public commercial 312-822-5177 firms is Thor Beveridge. e-mail: daniel.fortin@cna.com web: www.cnapro.comCNA — Nonprofit Adam S. Collins, CIC 2011 $5 MGA for CNA. D&O for nonprofitCommunity Homeowner Assistant Vice President community homeowner associations,Associations Ian H. Graham Insurance condo associations, commercial 15303 Ventura Boulevard, 12th Floor associations, timeshares, co-ops, Sherman Oaks, CA 91403 property owners associations and 818-742-1429 planned urban developments. 312-381-0593 (fax) e-mail: adam.collins@ianhgrahaminc.com web: www.ihginsurance.comCrum & Forster Gary Dubois, President 2011 $10 Primary or Excess: D&O/EPL/ Management and Professional Services Fiduciary — public, private, or Crum & Forster nonprofit, for virtually all classes. Management and Professional Services Standard and/or difficult-to-place Divisions risks. Lawyers Professional Liability, 305 Madison Avenue Accountants Professional Liability, Morristown, NJ 07960 Crime, Miscellaneous Professional 973-490-6600 Liability, Cyber Liability and 973-490-6965 (fax) Technology E&O are also available. e-mail: gary.dubois@cfins.com web: www.cfins.comEnduranceEndurance Risk Solutions Forbes Geekie, Senior Vice President 2011 $25 Full range of Management and(Bermuda) Endurance Risk Solutions (Bermuda) Professional Liability products for Wellesley House, 90 Pitts Bay Road Fortune 1000 publicly traded and Pembroke HM 08 Bermuda private commercial companies, 441-278-0434 financial institutions and law firms. e-mail: fgeekie@endurance.bm web: www.endurance.bmEndurance Risk Solutions, Joseph O’Donnell 2011 $25 D&O, EPLI, Fiduciary and Crime onUS Executive Vice President a stand-alone or blended basis. All Endurance Risk Solutions classes except financial institutions. 767 Third Avenue New York, NY 10017 212-209-6521 e-mail: JO’Donnell@enhinsurance.com web: www.endurance.bm Directors and Officers Liability Survey: 2011 Summary of Results 27
  • 29. Company Contact Capacity (in millions) Comments Energy Insurance Mutual Jill Dominguez, ARM 2011 $50 Industry mutual for utilities and Vice President – Underwriting energy services industries. Energy Insurance Mutual NOTE: Minimum attachment point 3000 Bayport Drive, #550 is $35 million. Tampa, FL 33607-8412 800-446-2270 or 813-287-2117 e-mail: jdominguez@eimltd.com web: www.eimltd.com Fireman’s Fund Bruce R. Bahn, Senior Product Director 2011 $10 Primary only. Private company or Special Risk, Professional Management nonprofit only. Liability Fireman’s Fund Insurance Company 33 West Monroe Street Chicago, IL 60603 312-456-5028 877-792-2242 (fax) 847-372-3565 (mobile) e-mail: bruce.bahn@ffic.com web: www.ffic.com Great American Jonathan G. Starck 2011 $25 All classes. Vice President Marketing Executive Liability Division Great American 1515 Woodfield Road, Suite 500 Schaumburg, IL 60173 630-897-4299 e-mail: jstarck@gaic.com web: www.GreatAmericanELD.com The Hartford Hartford Financial Michael Dandini, Senior Vice President 2011 $25 All classes. Products Hartford Financial Products 277 Park Avenue, 15th Floor New York, NY 10172 212-277-0750 e-mail: michael.dandini@thehartford.com Steven Boughal, Vice President & Chief Underwriting Officer Hartford Financial Products 277 Park Avenue, 15th Floor New York, NY 10172 212-277-0436 e-mail: steven.boughal@thehartford.com The Hartford — Nonprofits Jason Tharpe, Assistant Vice President 2011 $10 for most MGA for Hartford Financial Products Aon Association Services classes of on Nonprofit D&O. Nonprofit 1120 20th Street, N.W., 6th Floor nonprofit classes included but not limited to Washington, DC 20036-3406 organizations social service organizations, trade 202-429-8561 and professional associations, 847-953-2651 (fax) foundations, museums and chambers e-mail: Jason_tharpe@aon.com of commerce. The Nonprofit D&O web: www.npo-ins.com form has the ability to include D&O, EPL, Fiduciary and Crime coverage parts.28 towerswatson.com
  • 30. Company Contact Capacity (in millions) CommentsHCC Insurance HoldingsHCC Global Financial Andrew G. Stone, President 2011 $25 All classes. Uses U.S. SpecialtyProducts HCC Global Financial Products Insurance and Houston Casualty 8 Forest Park Drive Insurance paper. International Farmington, CT 06032 business contacts are Thibaud Hervy, 860-674-1900 CEO and Philippe Vezio, CEO, Spain e-mail: astone@hcc-global.com (34-93-530-7300). Brian Hickey Senior Vice President HCC Global Financial Products 37 Radio Circle Drive P Box 5000 .O. Mt. Kisco, NY 10549-5000 914-242-7808 e-mail: bhickey@hcc-global.com web: www.hcc-global.comHiscox Inc. Bertrand Spunberg 2011 $15 Primary and excess Not-for-Profit Senior Vice President and Private Company management Management Liability liability products including D&O, EPLI, Hiscox USA Fiduciary, Crime, Employed Lawyers 520 Madison Avenue as well as Public Officials liability. New York, NY 10022 Coverage offered to most classes of 978-276-6245 business regardless of size. Licensed 617-515-2361 (mobile) or admitted in all states. Admitted e-mail: primary and excess policies written Bertrand.Spunberg@Hiscox.com through Hiscox Insurance Company web: www.hiscoxusa.com or State National Insurance Company. Surplus lines primary and excess written on Lloyd’s paper.Hudson Insurance Group Jim Hooghuis, Chief Underwriting Officer 2011 $15 Primary, excess and Side A D&O(Odyssey Re) Hudson Financial Products policies for most public company Side A $15 176 Mineola Blvd., 2nd Floor classes including commercial and Mineola, NY 11501 financial risks of all sizes, REITs and 516-739-7979 IPOs. Packaged primary (D&O/EPL/ e-mail: jhooghuis@hudsoninsgroup.com Fiduciary/Crime), excess and Side A web: www.hudsoninsgroup.com policies for private and not-for-profit entities for most classes including health care.ICI Mutual Insurance Co. John T. Mulligan 2011 $200 Group captive formed by mutual funds Vice President – Underwriting Department and investment advisors. Sponsored Manager by the Investment Company Institute. ICI Mutual Insurance Group 1401 “H” Street NW Washington, DC 20005 800-643-4246 202-326-5376 (direct) 202-682-2425 (fax) e-mail: mulligan@icimutual.com Directors and Officers Liability Survey: 2011 Summary of Results 29
  • 31. Company Contact Capacity (in millions) Comments IronPro Greg Flood, President 2011 $15 D&O all classes and ancillary IronPro PTL/EPLI/Fidelity/E&O. Side A $25 One State Street, 7th Floor New York, NY 10004 646-826-6710 646-884-1729 (fax) e-mail: greg.flood@ironshore.com web: www.ironshore.com Liberty Liberty Insurance Kenia Delgado, Director 2011 $10 MGA for Liberty Insurance Underwriters, Inc. Underwriters, Inc./ Howden Specialty Underwriters Private company business with total assets Liberty Mutual Group 9100 S. Dadeland Boulevard of up to $250 million. D&O/EPL/Fiduciary/ Datran 1, Suite 1500 Crime/K&R Miami, FL 33156 786-513-2678 786-228-0521 (fax) e-mail: kdelgado@howdengrp.com web: www.howdenspecialty.com Liberty Mutual Group/ Trevor Howard 2011 $25 Primary and excess management liability Liberty International Senior Vice President products for firms of all sizes, including public Underwriters Management Liability D&O, private D&O and not-for-profit D&O; Liberty International Underwriters financial institutions D&O/E&O; International 55 Water Street D&O; Real Estate Investment Trusts (REITs); New York, NY 10041 Private Equity/Venture Capital; Employment 212-208-4139 Practices Liability; Pension Trust/Fiduciary 212-208-4266 (fax) Liability; Fidelity coverage. e-mail: Trevor.Howard@Libertyiu.com web: www.libertyiu.com Markel Insurance Salvatore Pollaro 2011 $10 Target Market: Private companies & not-for- Company Managing Director profit organizations up to $750M in annual Management Liability revenues on a primary and excess basis: EPL, Markel Insurance Company D&O, Fiduciary 708 Third Avenue Publicly Traded Companies up to $2B in New York, NY 10017 Market Capitalization on an Excess basis: 212-551-2281 EPL, D&O, Fiduciary e-mail: spollaro@markelcorp.com All classes eligible except Financial Institutions. Admitted and Surplus paper available. Monitor Liability Randy Mrozowicz 2011 Primary, excess and Side A with DIC for Public Managers, LLC Executive Vice President – Underwriting Companies. All classes except financial Public Monitor Liability Managers, LLC institutions, insurance companies and Company $10 2850 W. Golf Road, Suite 800 securities broker/dealers. Public and private Rolling Meadows, IL 60008-4039 Private companies and nonprofit organizations, 847-806-6590 ext. 531 Company $5 primary and excess. All products offer EPLI. e-mail: rmrozowicz@monitorliability.com All A+ rated W.R. Berkley member company Nonprofit web: www.monitorliability.com carriers. Issuing paper: Admiral Insurance Org. $5 Company, Berkley Insurance Company and Carolina Casualty Insurance Company. Public D&O contact is Joe Haltman 847-806-6590, ext. 532; private company and nonprofit contact is Tom Mathias 847-806-6590, ext. 510.30 towerswatson.com
  • 32. Company Contact Capacity (in millions) CommentsNavigatorsNational Indemnity Ajit Jain, President 2011 $100 All classes. Specializes in large,(Berkshire Hathaway) Specialty Risk Division difficult-to-place accounts. Berkshire Hathaway NOTE: Generally, minimum premium is 100 First Stamford Place $1 million. Capacity up to $1 million Stamford, CT 06092 or more available through negotiations 203-363-5205 on an individual basis. 203-363-5221 (fax) e-mail: ajain@berkre.comNavigators Insurance Christopher Duca, President 2011 $25 All classes. D&O and EPL for publiclyCompany/Navigators Navigators Pro traded and privately held firmsSpecialty Insurance One Penn Plaza, 32nd Floor worldwide. D&O contact is ScottCompany/Navigators New York, NY 10119 Misson at smisson@navg.com orSyndicate 1221 212-613-4305 (212-613-4214). International D&Oat Lloyd’s of London 212-613-4302 (fax) contact is Carl Bach, III at cbach@ e-mail: cduca@navg.com navg.com or 011-44-207-220-6976. web: www.navg.comOld Republic Martin Perry, President 2011 $15 All classes. We are interested in Chicago Underwriting Group technology and life science accounts Side A $25 191 North Wacker Drive, Suite 1000 on a primary and excess; and Chicago, IL 60606-1905 commercial and insurance company 312-750-8800 accounts on an excess basis. e-mail: mperry@cug.com web: www.cug.comOneBeacon Insurance John Chase, Senior Vice President & 2011 $20 D&O and related lines as follows:Company Chief Underwriting Officer Health care D&O — Hospitals, OneBeacon Professional Insurance Managed Care, Long Term Care. 199 Scott Swamp Road Medical Facilities Farmington, CT 06032 860-321-2555 Not for Profit — Education, Social, 860-321-2890 (fax) etc. 860-543-4743 (mobile) Private Company — Small and Large e-mail: JChase@OneBeaconPro.com (up to $10M capacity) Stacy Paquet, Vice President Management Liability 77 Water Street, 16th Floor New York, NY 10005 212-440-6521 917-828-2228 (mobile) e-mail: SKniffen@OneBeaconPro.com web: www.onebeaconpro.com Directors and Officers Liability Survey: 2011 Summary of Results 31
  • 33. Company Contact Capacity (in millions) Comments Philadelphia Insurance Thomas R. Herendeen, RPLU, AFSB 2011 $20 Coverage available for nonprofit Companies Senior Vice President, Underwriting organizations and private commercial Management and Professional Liability companies. Write both primary and One Bala Plaza, Suite 100 excess. Bala Cynwyd, PA 19004 610-617-7623 610-227-0027 (fax) e-mail: therendeen@phlyins.com RLI Insurance Company David Shanosky, CPCU, CPA 2011 $25 All classes. Executive Products Group RLI Insurance Company 47 Maple Street Third Floor Atrium Summit, NJ 07901 908-598-8375 e-mail: david.shanosky@rlicorp.com web: www.rli-epg.com -or- Chad Berberich RLI Executive Products Group 909 Lake Carolyn Parkway, Suite 800 Irving, TX 75039 972-677-2116 e-mail: chad.berberich@rlicorp.com RSUI Group Greg Buonocore, Senior Vice President 2011 $20 All classes. Company is admitted in RSUI Group 50 states and uses RSUI Indemnity 945 East Paces Ferry Road, Suite 1890 (admitted) paper and Landmark Atlanta, GA 30326 American (non-admitted) paper. 404-760-4969 Contact person for nonprofit is e-mail: gbuonocore@rsui.com Michelle Eason. Subsidiary of web: www.rsui.com Allegheny Corp. Contact person for private company business is Mark Hanington. Sargasso Mutual Wanette M. Vann, Underwriter 2011 $15M Primary or Excess Side A Insurance Companies Sargasso Mutual Insurance & B. $15M Excess Side A only. Primary $15 Company, Ltd. Coverage is available to eligible U.S. Victoria Hall, 11 Victoria Street or Canadian domiciled life insurance Hamilton HM 11 Bermuda Excess $15 companies. Note: managed by Marsh 441-298-6620 IAS Management Services (Bermuda) e-mail: wanette.m.vann@marsh.com Ltd. Side A Only $15 Scottsdale (Nationwide) Freedom Specialty Craig Landi 2011 $20 All classes of D&O and related lines Senior Vice President of business. Freedom Specialty 7 World Trade Center New York, NY 10007 212-329-6901 e-mail: craig.landi@freedomspecialtyins.com web: freedomspecialtyins.com32 towerswatson.com
  • 34. Company Contact Capacity (in millions) CommentsScottsdale Insurance Bernice Holloway, Vice President 2011 $5 MGA for Scottsdale for nonprofitCompany Negley Associates social service agencies and mental 103 Eisenhower Pkwy., Suite 101 health facilities. Roseland, NJ 07068 973-830-8500 973-830-8585 (fax) e-mail: bholloway@jjnegley.com web: www.jjnegley.comStarr Indemnity & Jim Pittinger 2011 $15 Primary and Excess; Public, PrivateLiability Company Vice President, Financial Lines Division and Not For Profit; Commercial and Manager Financial Institutions. Starr Indemnity & Liability Company 399 Park Avenue, 8th Floor New York, NY 10022 646-227-6573 917-375-1141 (mobile) e-mail: james.pittinger@starrcompanies. comTorus US Services Inc. Jeffrey Grange 2011 $10 Management Liability products SVP Head of Management Liability offered: Torus Insurance D&O, EPL, Fiduciary and Excess Crime 5 Harborside Plaza, Suite 2600 for Public, Private, Nonprofit and Jersey City, NJ 07311 Financial Institution risks 201-830-2534 e-mail: jgrange@torus.com Target Classes: Consumer products, web: www.torusinsurance.com services, manufacturers, aerospace, defense contractors, transportation, energy, natural resources, utilities, hospitality, oil & gas refiners, technology and specialty retail Opportunistic: Homebuilders, pharmaceutical, life sciences, health care, casinos and construction.TravelersTravelers Carl Holbig, Public D&O Product Manager 2011 $25 Considers all classes; primary and Bonds & Financial Products excess. Public company liability Travelers contact is Bryan Kocon 678-317- One Towers Square 7892; contact for private and Hartford, CT 06183 nonprofit business is Peter Herron e-mail: cholbig@travelers.com 860-277-1961; contact for financial web: institutions is Kristin Roger 860- www.travelers.com/business-insurance 277-8553. Issuing paper includes: management-professional-liability Travelers Casualty and Surety Company of America, Travelers Excess and Surplus Lines Company, St. Paul Mercury, and St. Paul Surplus Lines. Directors and Officers Liability Survey: 2011 Summary of Results 33
  • 35. Company Contact Capacity (in millions) Comments G.J. Sullivan Co. Paul Bubnis, Vice President 2011 $25 Managing General Underwriter for G.J. Sullivan the Travelers Wrap+® for Health Care 625 The City Drive, Suite 400 Organization Directors, Officers and Orange, CA 92868 Trustees Liability and Health Care 714-621-2340 Organization Employment Practices e-mail: BubnisP@es.gjs.com Liability products. web: www.gjsullivan.com Western World Insurance Gregg C. Rentko, CPCU, AU, MSIM 2011 $5 Tudor Pro and Tudor Specialty Company Second Vice President Liability have been merged to Brokerage Division form Western World Brokerage- Western World Insurance Company Professional, which is responsible 400 Parson’s Pond Drive for underwriting all open brokerage Franklin Lakes, NJ 07417 professional and management lines. 201-847-2820 While the lead line remains Nonprofit e-mail: g.rentko@westernworld.com D&O, Brokerage-Professional is web: www.westernworld.com increasing its focus on Private Company, Municipal and School Board Legal Liability. Management Liability is now written on Western World Insurance Company paper in all states, except New York (Tudor). United Educators Ins. Bryan S. Elie 2011 $25 Risk Retention Group for A Reciprocal Risk Vice President, Underwriting universities, colleges, non-public Retention Group United Educators Insurance RRG elementary and secondary schools. Two Wisconsin Circle, 4th Floor Write educators legal liability. In Chevy Chase, MD 20815-9913 addition, write public K-12 but only 301-907-4908 ext, 426 for limits up to $5 million. e-mail: belie@ue.org web: www.ue.org W.R. Berkley Paul A. Brophy 2011 $25 All classes of D&O and related lines Senior Vice President of business. (Berkley Professional Side A $25 Berkley Professional Liability, LLC Liability, LLC) 14 Wall Street New York, NY 10005 212-618-2903 212-618-2940 (fax) e-mail: pbrophy@berkleypro.com web: www.berkleypro.com XL Insurance XL Insurance (Bermuda) Matthew G. Irvine 2011 $50 All classes. Side A can be written Ltd. Senior Vice President and CUO on a primary, excess or excess/ XL Insurance (Bermuda) Ltd. DIC basis. Minimum attachment Brian O’Hara House point on Side B and C is $25M. One Bermuda Road Maximum capacity for B&C coverage Hamilton HM 08 Bermuda is $25M. No B&C coverage is 441-294-7378 available for financial institutions or e-mail: Matthew.Irvine@xlgroup.com pharmaceutical companies. web: www.xlcapital.com34 towerswatson.com
  • 36. Company Contact Capacity (in millions) CommentsXL Professional USA John T. Burrows, Senior Vice President 2011 $50 Full coverage ABC and up to $50 XL Professional million Side A DIC. All classes of 100 Constitution Plaza business on primary and excess Hartford, CT 06103 basis. 860-948-1809 860-948-1899 (fax) e-mail: john.burrows@xlgroup.com web: www.xlprofessional.com Bernie Horovitz Executive Vice President Chief Underwriting Officer 100 Constitution Plaza Hartford, CT 06103 860-948-1819 860-948-1899 (fax)ZurichFinancial Institutions Christopher A. Taylor 2011 $15 Writes D&O/E&O for insurance Head of Financial Institutions companies, credit unions, regional Zurich Financial Institutions and community banks and savings 600 Red Brook Boulevard, Suite 600 institutions. Writes primary coverage Owings Mills, MD 21117 and will consider excess coverage. 410-559-8800 410-559-8802 (fax) e-mail: christopher.taylor@zurichna.com web: www.zurichna.com/feZurich Global Corporate George Melides 2011 $50 All classes. Does not write U.S.UK Head of Commercial D&O for GCUK and domiciled organizations. Issuing paper UKGI is Zurich Insurance, Plc Zurich Global Corporate U.K. London Underwriting Centre Three Minister Court, Mincing Lane Suite No. 3, 3rd Floor London EC3R 7DD 011-44-207-648-3008 e-mail: George.Melides@zurich.com web: www.zurichlondon.com Zurich Specialties William Fahey, Senior Vice President 2011 $25 Primary and excess D&O for midsize Management Solutions Group and large organizations in most Zurich Specialties industries. Zurich offers corporate One Liberty Plaza, 30th Floor D&O featuring Retired Independent New York, NY 10006 Directors Side A coverage, 212-553-5629 Environmental Mismanagement e-mail: will.fahey@zurichna.com claims extension, enhanced Side A web: www.zurichna.com coverage, and enhanced definitions. Also available are solutions for international premium tax and local policy placement issues. Directors and Officers Liability Survey: 2011 Summary of Results 35
  • 37. Appendix B Insurance Placement, Reinsurance Intermediary Services and Insurance Program Reviews Towers Watson places D&O and related Executive Towers Watson works with clients to do the Liability coverages with insurers on behalf of our following: corporate clients. Towers Watson also provides •• Explore the company’s objectives with respect D&O liability and insurance program reviews for to its D&O insurance program. For example, is organizations seeking an independent review of risks the company trying to minimize costs? Does it and coverage. need to cover its own liability or payments made Executive Liability Insurance Brokerage to directors and officers? Should it increase the Towers Watson provides retail brokerage services scope of its coverage to ensure that directors as part of our risk management and insurance and officers are comfortable with their level of consulting to clients. We provide a sophisticated protection? alternative to traditional insurance intermediaries •• Check corporate indemnification provisions to see that combines seasoned insurance brokerage if there are opportunities to improve the breadth expertise with the strong analytical and consulting of coverage to directors and officers. expertise of Towers Watson. Clients can get the •• Ensure a thorough understanding of current benefits of the D&O liability and insurance program issues in the litigation environment and the review described above, with the additional benefit current insurance marketplace, including current of having Towers Watson also place the insurance trends in D&O claims and insurance purchasing program in the insurance market. practices. •• Identify the best structure for the program based Executive Liability Reinsurance on the company’s unique risk profile, goals for the Towers Watson assists insurance company clients coverage and appetite for risk. with all aspects of D&O and related lines. Our •• Review existing programs for consistency with the combined brokerage and insurance consulting company’s purchasing philosophy, program cost expertise provides D&O writers with a broad menu and current market conditions regarding capacity, of services, including: pricing and coverage restrictions. •• Primary and excess rate making •• Increased limit factor benchmarking •• Insurance policy comparisons Contacts •• Reinsurance contract wording analysis and review Lawrence A. Racioppo •• Stochastic modeling of alternative reinsurance larry.racioppo@towerswatson.com programs to compare the expected costs and +1 203 363 1907 impact on the volatility of retained risk •• Monitoring major claims affecting this line of Michael Turk business on a global basis michael.f.turk@towerswatson.com +1 203 351 5193 Towers Watson staff is dedicated and experienced in negotiating and servicing the specialty product Lorraine Linehan lines associated with D&O liability for U.S. and lorraine.linehan@towerswatson.com international exposures. +1 617 638 3769 D&O Liability and Insurance Program Review Nancy Serio A D&O insurance program review provides an nancy.serio@towerswatson.com independent assessment of the reasonableness +1 860 843 7149 and quality of the D&O program as it relates to the organization and its risk profile.36 towerswatson.com
  • 38. Directors and Officers Liability Survey: 2011 Summary of Results 37
  • 39. About Towers WatsonTowers Watson is a leading global professional servicescompany that helps organizations improve performance througheffective people, risk and financial management. With 14,000associates around the world, we offer solutions in the areasof employee benefits, talent management, rewards, and risk andcapital management.Copyright © 2012. All rights reserved.NA-2011-22159towerswatson.com