Tuesday 16 June 2009
Are you paying too much?
First benchmarking survey of its kind enables buyers to compare D&O programmes
AIRMIC and Advisen, the international supplier of benchmarking services, have produced detailed aggregate data of D&O insurance programmes purchased by risk managers. It is the first exercise of its kind ever in the UK, with 277 AIRMIC members taking part.
The survey follows an announcement by the two organisations in April 2008 that they would collaborate to enable insurance buyers to compare themselves with their peer groups. The aim now is to conduct similar exercises with other major lines of business and to repeat the D&O benchmark next year. Advisen is also responsible for the RIMS (Risk and Insurance Management Society) benchmarking survey in the United States.
The survey shows that AIRMIC members are responding to an increasingly hostile shareholder litigation environment with substantial D&O programme limits: about 25% of companies that responded said they bought £100 million or more D&O coverage. Those with exposures in the USA took bigger lines on average than the others.
Chemical, natural resources and pharmaceutical companies paid the highest estimated average annual D&O premium (£13.2 million), though the figure was influenced significantly by one company that paid a very large premium. The financial services sector emerges as the second biggest spenders with an average of £12.4 million.
“This survey and future surveys like it will be of immense value to our members,” said AIRMIC chief executive John Hurrell. “Whilst the individual circumstances of each organisation will differ, the information is enough to give buyers a good starting point in their negotiations with underwriters.”
"We at Advisen are delighted to partner with AIRMIC on this important project," said Tom Ruggieri, President and CEO. "UK companies and their directors are increasingly exposed to suits by shareholders and other stakeholders. Good benchmarking data enables risk managers to make better informed decisions about their D&O insurance programmes."
The buyers who contribute do so anonymously. The data are then aggregated by industry, size of company and geographical area, revealing details of limits as well as prices paid as percentages of the total cover.
The full survey report, consisting of detailed aggregate data of D&O insurance programmes, can be purchased for $150 (approximately £95) via The Advisen Corner, at http://corner.advisen.com/reports_airmic_DO_June09.html. The survey report includes an executive summary, as well as a breakdown of the participants by turnover level and industry sector. Data on limits and premiums is presented in aggregate and presented in turnover and industry sector groupings, among other relevant data groups.
For further information, contact Mark Baylis, +44(0)7775 693994, mark.baylis@airmic.co.uk
Note to editors: AIRMIC (the Association of Insurance and Risk Managers) represents risk managers and corporate insurance buyers, including 85% of FTSE 100 companies. Their annual conference “promoting the risk manager” runs at the Bournemouth International Centre June 16-17.