A report from Tillinghast, part of Towers Perrin, after research among 2,139 companies in the US and Canada, shows that Directors and Officers (D&O) liability insurance premiums increased by approxima

The 2003 D&O Premium Index median and average premiums were the highest ever reported by respondents

Other findings include:

- 91% of D&O claims against non-profit organisations were brought by employees
- At for profit companies with fewer than 500 shareholders, 50% of D&O claims were brought by employees, compared with 24% at companies with more than 500 shareholders
- Employment discrimination was the most frequently cited employment related claim, followed by wrongful termination (24%)
- Though there was a dip in the frequency of D&O claims, severity, excluding shareholder claims, increased by 40%
- Those companies involved in M&A activity were more than twice as likely to have at least one D&O claim. On average they also had three times as many D&O claims than companies not undergoing such reorganisation

Tillinghast predicts that, although capacity in the North American D&O market will increase, the sector will remain hard, with premiums stabilising overall. However, some industry sectors will still experience big increases in their premiums. It also predicts a narrowing of cover.

Tillinghast says that the UK market for D&O in 2003 was between EUR400m and EUR600m estimated premium income, just under one per cent of total UK market non-life premium income, compared to two per cent in the US. The UK D&O market has hardened and there have been some substantial premium increases, especially for large and multinational companies. Premiums are expected to continue to rise next year.

Many of the coverage extensions provided during the last soft market have been reduced and new coverage restrictions have been introduced, while claims have increased in severity and frequency.