Today's headlines tell a sad and shocking story of apparent corporate greed, cover-up, even fraud! In many of these cases, it is the members of the corporation's Board of Directors who are being called to task. Were they active participants in the mismanagement, or were they just asleep-at-the-wheel? In either case, one thing is virtually certain - Each one of them will be held accountable, and will be named as an individual defendant in multiple lawsuits.

Because of such headlines and mounting government oversight, it is reported that some corporations - particularly those involved in highly volatile industries - are now finding it a challenge to attract new board members. This is disappointing, because the vast majority of corporate boards are comprised of honorable, hard-working, experienced professionals, virtually all of who conduct their affairs with the highest of integrity.

While today's sensational headlines will pass, the fact is that a new era of corporate responsibility is upon us - and with it comes the need for the best and the brightest to serve as corporate directors. Whether a publicly held corporation, a privately held corporation, or a not-for-profit corporation, a critical element in maintaining a board comprised of the best-qualified directors is that of directors & officers ("D&O") liability insurance.

One does not have to look very far these days to see why publicly traded corporations simply must carry adequate insurance coverage for their officers and directors. Enron, WorldCom, K-Mart, Tyco, Adelphia, Global Crossing, Sunbeam, Waste Management, Cendant, Xerox, Leslie Fay, Warnaco ... these are just a few of the more recognizable corporate names that have been swept up in various forms of litigation, much of which focuses on the actions (or the inactions) of the corporate officers and the members of the boards of directors.

In the arena of corporate misappropriation and fraud, it is not at all uncommon for the first lawsuit to be filed within 24-48 hours after the public disclosure of any sort of adverse corporate news. Law firms of all sizes specialize in representing either plaintiffs or defendants in these actions. Whether you like it or not, D&O litigation is a huge business. Of course, the dot.com boom and bust of the past few years has only exacerbated the problem, as investors seek to recover on their losses.

All of this activity has not gone unnoticed by insurance companies, many of whom are now severely curtailing their underwriting activities as insured losses pile up. Some insurance carriers have withdrawn entirely from the public company D & O market, while others who, say, have been willing to write primary limits as high as $25 or $50 million, have now reduced their capacity to maybe only $5 or $10 Million. In order to obtain limits higher than this, it is now necessary to "layer" the coverage using several different carriers. But even excess D&O coverage has become much more expensive, as the likelihood that the primary limits will be exhausted. Excess pricing that might have been at 50-60% of the primary is now at 90-100% . . . or sometimes even more!

What does this all mean? Well, first of all it may mean we will see underwriters for those insurance carriers who remain in the D&O market becoming very selective about which accounts they are willing to write.

From a Fortune-500 right on down to the smallest start-up, the fact is that now more than ever, every publicly traded company needs to be absolutely certain that their officers and directors are adequately protected against D & O liability claims.

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