E&O/D&O COVERAGES AND TRENDS

WEBB HUBBELL,CRM,CWCA

VICE-PRESIDENT AND COUNSEL

THE MCLAUGHLIN COMPANY

WASHINGTON,DC

202-293-5566

WHUBBELL@MCLAUGHLIN-ONLINE.COM

THIS BUSINESS IS CYCLICAL

UNDERWRITING -- SOFT MARKET

• 1991-EARLY 2001

• 2004 -- PRESENT

• LOTS OF CAPACITY

THIS BUSINESS IS CYCLICAL

UNDERWRTING -- HARD MARKET

• 1986-1991

• 2001-2004

• ?

WHAT HAS UNDERWRITERS NERVOUS?

• GLOBAL WARMING

• PROPERTY LOSSES

• CLAIMS AGAINST CONTRIBUTORS

• CONGRESSIONAL ACTIONS

• INVESTOR CLAIMS

WHAT HAS UNDERWRITERS NERVOUS?

SUBPRIME CRISIS

• RISING DELINQUENCIES

• MORE THAN 50 MORTGAGE LENDERS BANKRUPT

• INSURANCE COMPANY AND PENSION PLAN EXPOSURE

• LAWSUITS AGAINST COMPANIES THAT INVESTED

• LAWSUITS AGAINST ORIGINATORS

WHAT SHOULD MAKE YOU NERVOUS

CYBERISK

• Failure of your network security • Failure to protect or wrongful disclosure of private or confidential

information • Failure to protect Personally Identifiable Information from

misappropriation • Violation of any federal, state or local privacy statute alleged in

connection with failure to protect private information.

WHAT SHOULD MAKE YOU NERVOUS

FIDUCIARY LIABILITY

• Ohio WC Fund Problems

• San Diego

• By one estimate, state and local governments owe their current and future retirees roughly $375 billion more than they have

committed to their pension funds.

• Barclays Global Investments has calculated that if America’s state pension plans were required to use the same methods as

corporations, the total value of the benefits they have promised would grow 22 percent, to $2.5 trillion. Only $1.7 trillion has been

set aside to pay those

WHAT SHOULD MAKE YOU NERVOUS

IMMUNITY

• Emergency Immunity

WHAT SHOULD MAKE YOU NERVOUS

THIRD PARTY CONTRACTORS

WHAT SHOULD MAKE YOU NERVOUS

EMPLOYMENT RELATED PRACTICES

Three of five businesses will be sued this year by an employee or a former employee over an employment practice

Employment practices suits account for 20% of all Federal Court filings

56% of all employment practice filings going to trial result in a verdict for the plaintiff employee

The average jury award is S250.000, with 15% exceeding $1 million

33% of wrongful termination verdicts have punitive damages equal to or exceeding compensatory damage.

WHAT SHOULD MAKE YOU NERVOUS

MEDIA LIABILITY

• BLOGS

• Newsletters

• Websites

• E-Mail

• Trademark and Copyright

WHAT SHOULD MAKE YOU NERVOUS

KIDNAP AND RANSOM

• Foreign Travel

• E-mail Attacks

AFFIRMATIVE STEPS

D&O COVERAGE ISSUES

Appendix

http://dandodiary.blogspot.com

http://webbsays.blogspot.com

AFFIRMATIVE STEPS

ERM/RM

CRM

RIMS

AFFIRMATIVE STEPS

CONTRACT REVIEW

Lawyers versus Insurance Consultants

APPENDIX