May 2, 2007

The Results Are In.

Survey Says Soft Market Continues for D&O

According to the latest 2006 Directors and Officers Liability Survey from Towers Perrin, the soft market is continuing for D&O liability insurance. This means even more competition and the increased need for an expert to help you and your clients navigate through the myriad of products to find the right coverage for every unique situation.

Highlights of this newest survey:

Premiums Continue To Drop. Public companies with assets under $6 million showed premiums down by 21%. Public companies with assets over $10 billion were down 4%. Private organizations reported an increase of 5% in average premium.

Increased D&O Policy Limits and Slightly Lower Retentions. Survey respondents continue to report increasing their D&O limits by an average of 8%. Some of the more significant increases occurred in companies with assets between $5 billion and $10 billion.

Growing Coverage Enhancements. 31% of respondents reported an increase in coverage enhancements. There was also an increase in the purchase of stand-alone EPLI products, although the majority still buy this coverage through their D&O policy.

Side A Only Coverage Growing in Popularity. Side A only policies, which cover the individual directors and officers when they are not indemnified by their organization, have been growing in popularity over the last few years. The largest increases have occurred among nonprofit and private organizations, with 14% of all participants reporting purchasing a Side A only D&O policy. Plus, with the majority of stock option backdating claims resulting in shareholder derivative claims, a common source of Side A D&O claims, this will be an area to watch to see if there is any effect on the pricing and scope of such policies.

Directors' Interest in D&O Insurance Continues to Grow. Based on asset size, 66% to 75% of organizations reported inquiries from their directors into the organization's D&O insurance. Public and private organizations reported much higher inquiry levels than nonprofits.

Our Professional & Management Liability department is composed of dedicated brokers who specialize in the placement of D&O and professional liability insurance. Today, S. H. Smith writes over $70 million in D&O and E&O premium and handles more than 100 classes of E&O in more than 35 admitted and non-admitted markets, with a capacity of $100+ million. Few companies offer so much D&O experience.

If you have any questions on this survey or would like more information, please contact:

Offices in Connecticut, Massachusetts, Minnesota, New York, Ohio and Florida

For general information about S. H. Smith, feel free to call or email anyone at any of our offices. For any state not listed below, please contact Bruce Anderson, Chief Marketing Officer. S. H. Smith & Co. is a national firm, licensed to write in all 50 states.

S.H. Smith & Company is a national, independently-owned excess and surplus lines insurance broker, managing general agency and program administrator. Our specialists in each of our divisions have a depth of experience which we believe is unmatched in the industry. For more information, please call Scott Smith at 860.561.3600 or email by clicking here.

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