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D&O Liability Insurance Rates Rise Amid Corporate Scandals: Little Moderation in Costs Is Expected As New Governance Rules Are Welcomed.

Article Excerpt
Even the cleanest American companies are paying through the nose for the sins of their less noble peers. While financial scandals have exploded, technology players have melted down, and shareholder lawsuits have proliferated, all public companies have been hit by a spike in costs of directors and officers (D&O) liability insurance. And experts in the field expect no short-term letup in D&O rate increases at the very time corporations are under intensifying regulatory and investor pressures to not only recruit the best directors but to require them to work harder.

Ironically, the new Sarbanes-Oxley law may be a moderating force over the longer term. But not immediately, given the way the act spells out requirements for director actions in areas where boards previously had considerable discretion or wiggle room and thus heightens the probability of shareholder lawsuits for any fumbles that appear to violate the statute....

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