Companies received a record number of D&O inquiries in 2006, according to a Towers Perrin survey...

According to a Towers Perrin survey, companies received a record number of inquiries in 2006 (up 16% from 2005) from potential board members who are concerned about their current directors' and officers' (D&O) liability insurance.

At the same time, the survey shows that companies are responding to these inquiries by providing broader personal liability protection for directors and officers. In fact, 14% of those surveyed purchased Side A-only coverage in the past year. Side-A coverage provides D&O coverage for personal liability when they are not indemnified by the organisation.

“For the first time, a study is confirming a significant change in how companies are protecting directors and officers from personal liability,” said Michael Turk, senior consultant. “While Side A-only coverage has been growing in popularity over the last few years, we now have data to show just how prevalent the coverage has become.”

The popularity of Side A-only coverage reflects directors and officer's desires for improved personal coverage. Among repeat survey participants, there was a 53% increase in organisations that purchased a Side A-only D&O policy. Twelve percent of repeat participants purchased such a policy, up from 8% in 2005. Although public companies are the most likely to purchase a Side A-only policy, the largest percentage increases occurred with private and nonprofit organisations.

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