For comparative purposes, many D&O Loss Evaluators like to remove the anomalies like the influx prior to SLRA (usually referred to PSLRA), the Securities Laddering Cases, the Market Timing Late Trading of Mutual Funds, etc., etc., etc. However, a relentless series of anomalies, that are consistent in their timing and which demonstrate a constant rise in severity, should not be removed to create statistical accuracy. The question is not whether there is going to be a systemic loss in 2010, the question is ‘what industry segment will it affect?’
If we were to put the D&O landscape into property terms, the ‘100 year storm’ is happening every year, but unfortunately there is not enough similarity with previous storms to accurately track data and predict the future. We can’t take the position that the storm is not coming, we just need to adequately prepare all industries.
Advisen has stated in an earlier version of its large loss database that cases related to the Madoff Scandal have hit the 100 mark, out of 27,500 in their online Large Loss archive. Advisen suggests Subprime cases hit 664 and Stock Option Grants 264. The Advisen’s Large Loss database is a valuable tool, especially for US exposures, but keep in mind that some of these cases include actions from South America and Belgium.
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Partner, Mitchell Sandham Insurance Brokers
Corporate Risk Management
Financial Services and Executive Liability