D&O Costs Skyrocket

Directors’ and Officers’ (D&O) liability insurance costs for financial institutions increased 50 percent in the fourth quarter of 2008 compared to that of 2007, according to the Quarterly D&O Pricing Index from Aon Corp’s Financial Services Group. This is the first time year-over-year price increases were found in over five years. Aon said a number of unprecedented events contributed to the significant price increases, including: reports of more than 1 million job losses in Q4 2008; Bernard Madoff’s alleged Ponzi scheme; a substantial decline in major stock indices; and federal securities class action lawsuits activity in 2008. Aon’s D&O Index also shows that the average price for $1 million in coverage limits increased 3.15 percent from Q4 2008, compared to Q4 2007. This is the first time since 2003 that price increases in the financial sector have been significant enough to move the entire index. So will there be more? “In the short term, we expect to see D&O pricing for the financial sector continue to rise,† said Mike Rice, managing director of Aon’s Financial Services Group and author of the Index in a press release. “It is possible, however, that a tough underwriting environment could emerge for all public companies as the economy continues to negatively impact both financial results and stock prices.†Ã‚  

Winter Storm Focus

With a major winter storm barreling out of the Southeast and up into the Northeast United States overnight, it’s a good time to revisit some winter storm facts and stats. According to Insurance Information Institute (I.I.I.)  research, winter storms result in about $1 billion in insured losses annually and are the third-largest cause of catastrophe losses, after tropical cyclones and tornadoes. Melting snow can inflict significant damage to property. From 1988-2007, winter storms resulted in more than $24 billion in insured losses. Winter storms also  account for a large proportion of homeowners claims each year. In 2006, water damage and freezing accounted for approximately 20 percent of all homeowners insurance claims in the country. For homeowners preoccupied with the economy, the good news is that standard homeowners policies cover property damages caused by burst pipes, ice dams, wind and hail, and damages from weight of ice or snow. However, property damage caused by flooding (water that comes into the home from the ground up) is  typically covered by a separate flood insurance policy. Check out I.I.I.  flood insurance  facts & stats.