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D&O Insurance Rates Eyed as Corporate Directors Increasingly Targeted

A report in the Financial Times cites research showing a rising number of shareholder lawsuits against corporations, officers and boards, largely related to the #MeToo movement and data privacy issues, and insurers are beginning to grapple with the impact. According to the FT report, about $15 billion of premiums are collected annually for directors and officers (D&O) insurance, but profitability has been squeezed because of competition for the business, as well as the rising tide of lawsuits. The article also noted that lawsuit settlements are getting larger, with the median settlement at $13 million in 2018, a five-year high, according to Nera Consulting.  Insurance firm officials quoted in the report noted that D&O rates have not gone up recently, and the rising tide of lawsuits and higher settlements are causing insurers concern. One official said the industry is trying to correct itself through rate increases although insurance firms may experience more hardship before profitability is restored.

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