Title: Are You Trying to Cover Too Much with Your D&O? More and More Protection Draws on the D&O Policy. If You're Not Careful, the "Ds" and the "Os" That D&O Was Designed for May Not Be Adequately Protected
Abstract: should not be your first line of defense, says insurance consultant Ron Summerville. It should be your last resort. However, while it is also said that that the best protection a bank director can have is a good open working relationship with a trustworthy CEO, there are darn few directors--and senior bank officers, for that matter--who would try walking a high wire without a net. Thus, many banks provide their directors officers with liability insurance. Indeed, Summerville, president of insurance consultancy RCS Consulting Group, Chevy Chase, Md., says that has been the hot button of bank insurance for some years now, and I don't think that's going to change. If anything, he says, directors officers pay more more attention to what was once a routine purchase. Increasingly, he says, directors officers ask management for detailed reports about the coverages obtained to protect them insist on close attention being paid to changes in the market. A separate piece of market good news for community banks is that the market for for their part of the business has been stable continues to be, according to interviews with carriers others. D&O for banking is sometimes painted with a global brush, says Judi Kovach, product development manager at Progressive Casualty Insurance Co., which manages the ABA-sponsored insurance program. However, Progressive other carriers note that the markets for small medium-sized banks the markets for large banks increasingly represent two different animals. Some large institutions have found they can't even obtain all the coverage they want from a single carrier. This reflects not only their increasing size, but also their depth breadth of business. Small medium-sized banks, by contrast, remain contained enough in scope that carriers feel more able to get their arms around them. This, the high degree of regulation that banks labor under, make them a relatively stable market to insure directors officers in, at least under present circumstances. After a year where headlines about the ongoing pain of the implementation of the Sarbanes-Oxley Act have painted a doomsday scenario, this may come as something of a surprise. Yet a straw poll of members of the ABA Community Bankers Council indicates that purchasing has been a relatively straightforward matter recently. Bankers reported no significant surprises as their policies came up for renewal. For institutions that have not explored additional levels, scopes, or types of coverage, overall pricing has been stable or declining. Pricing has been coming down after the 9/11 effect, says Richard Look of Venture Programs, Inc. The reinsurance industry has been starting to settle down a bit. Venture is a managing general agent for bank works with Chubb Hartford to tailor their offerings to community banks. SOX impact still unknown Many of these institutions are not directly affected--at least, not officially--by though many believe that in time the act's provisions will apply to smaller nonpublic banks. However, for the most part Sarbanes-Oxley's effect has yet to be reflected. The jury's still out on Sarbanes-Oxley, says Elissa Sirovatka, consulting actuary with the Tillinghast arm of the Towers Perrin consulting firm. Sirovatka is survey program leader. We haven't been able to discern a clear impact from Sarbanes-Oxley, says Sirovatka. Her view was repeated often by carriers others questioned about the governance law. The general feeling I have is that financial institutions are well ahead of the game on Sarbanes-Oxley, explains Gary Erickson, executive vice-president-financial institutions, at St. Paul Travelers. Changing practices, changing premiums This is not to say that community banking has resided in some vacuum. …
Publication Year: 2005
Publication Date: 2005-01-01
Language: en
Type: article
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