The cost of directors' and officers' (D&O) cover has more than tripled in the past three years, according to research by Aon.
The study of D&O premiums paid by 55 of Aon's corporate customers showed that the average premium paid per £1m of cover provided increased from £3,025 in 2000 to £10,470 by the end of 2002. The results concurred with a survey by Marsh which found that D&O rates had soared by up to 1,000% this year.
The healthcare and pharmaceuticals sectors suffered the steepest hikes, with premiums surging eight-fold since 2000. Average premiums for D&O cover in the sector rose from £3,800 in 2000 to £30,000 at the end of 2002.
Aon professional risks director Adam Codrington said that companies operating in the US had been hit with large price hikes because of the increasingly litigious nature of US corporate culture. High-profile crises in America such as the Enron collapse have fuelled hundreds of compensation claims from irate investors.
He said: "Evidence suggests the cost of D&O cover will continue to increase but not at the rates we have seen over the past three years. However, the situation remains fragile. If any major European companies were to be hit with serious litigation or class actions, the cost of cover could spiral."