Risk managers cite growth in liability rates

Risk managers say costs for directors’ and officers’ (D&O) and pension fund liability insurance are soaring, while property risks are seeing some relief, according to quarterly results of the Risk and Insurance Management Society (RIMS) and Advisen Ltd. “Benchmark Survey”.
Fiduciary liability rates, such as D&O, are climbing sharply, in some cases increasing as much as 500%. “The increase in fiduciary liability costs is startling, even in this hard market,” says Christopher Mandel, RIMS vice president, chief risk officer and secretary. “With the spate of lawsuits against these trustees, the resulting effect on insurance prices is understandable, but this increase is dramatic.”
He notes, however, that policy counts (the number of policies required to meet insurance needs) is rising only slightly, which is of some relief to risk managers. As well, the survey indicates retentions and deductibles on property policies are not worsening.
Pension fund liabilities have become a high profile issue in the U.S., where under-funded programs and mismanagement have led to lawsuits. The result is premium increases of as much as 150%.
D&O rates have risen by 200% over last year, the survey shows, despite hardening in that line now into its third year.
Many other lines continue to see double-digit rate increases.
RIMS began this year to release results of the survey, which includes about 750 corporations, on a quarterly basis.