D&O claims frequency down in 2007: Role of SOX uncertain

Despite a slight reduction in frequency of class actions against boardroom executives in the United States, its too early to say weve entered a Brave New World of good corporate behaviour because of the Sarbanes-Oxley Act [SOX], a reinsurer told delegates of a PLUS Canada seminar in Toronto.
The U.S. government in 2002 passed SOX, which was intended to improve corporate governance after a series of corporate financial scandals rocked the country (specifically, the financial meltdowns at Enron and WorldCom).
Reinsurers note the frequency of D&O claims in the U.S. is down over the past year, although whether that drop is linked to the implementation of SOX remains anyones guess. All it would take is one major settlement and reinsurers costs might go up, even though the frequency is down, notes Tim McCoy of Signet Star Re in Greenwich, Connecticut, a panelist at the PLUS Canada seminar.
Are we in a false state of mind in thinking we have a one-year blip in the filings of class action lawsuits south of the border? moderator Darin Scanzano of Torontos Liberty International Underwriters asked the PLUS Canada panelists.
McCoy agreed there is no doubt the frequency of class actions against corporate executives in the United States is down. But what that means is still under review, he added.
Has SOX set in? McCoy asked rhetorically. Has it really changed the mindset in the boardroom? Have we flushed out a lot of the accounting issues? Seeing people in orange suits and handcuffs, did that change behaviour in the boardroom? Is that whats causing the recent phenomenon?
Im sure thats contributing to it, but Im not ready to say we are in a Brave New World.