The number of claims in the directors & officers' (D&O) insurance market is increasing with shareholders of US-listed companies identified as one of the biggest areas of concern, according to new research by Aon UK.
According to the report, this exposure is being taken seriously by businesses with 55% of survey respondents making key decisions on buying D&O cover at board level.
The report says that industries that have seen the greatest upturn in claims are those operating in the technology, media and telecommunications sector. They are closely followed by financial institutions, which are subject to a heightened level of regulatory focus both in the US and Europe. A number of class actions against high-profile European companies also prompted a surge in claims in the pharmaceutical industry.
Despite the overall number of claims rising, buyers of D&O cover have been paying lower premiums in 2005, with seven out of ten underwriters reporting lower rates. Reductions in some cases have exceeded 20%.
Adam Codrington, executive director in Aon's professional risks division, said: “It is very encouraging to see that businesses have responded to the threat of litigation and are seeking appropriate cover at the highest level. Although we are currently seeing an anomaly with claims increasing and rates falling, if litigious trends continue and loss costs accrue, then we may see some upward pressure on premiums, though there is little evidence of that happening in the short to medium term.”