LONDON, 27 September 2005 – The number of claims in the directors & officers (D&O) insurance market is increasing with shareholders of US listed companies identified as one of the biggest areas of concern, according to new research* by Aon Limited among European headquartered companies and insurers. This exposure is being taken seriously by businesses with 55% of survey respondents making key decisions on buying D&O cover at board level.

Industries which have seen the greatest upturn in claims are those operating in the technology, media and telecommunications (TMT) sector.  They are closely followed by financial institutions which are subject to a heightened level of regulatory focus both in the United States and Europe. A number of class actions against high profile European companies also prompted a surge in claims in the pharmaceutical industry.

Despite the overall number of claims rising, buyers of D&O cover have been paying lower premiums in 2005 with seven out of ten underwriters reporting lower rates; reductions in some cases have exceeded 20%. Rates for large corporations or those in more challenging industries are seeing smaller reductions.

All respondents to the survey were satisfied with the D&O cover provided to them. This sentiment is reflected in high customer loyalty levels, with 74% of insurers saying that they renewed over 80% of their book of business. 

Commenting on the report, Adam Codrington, Executive Director in Aon’s Professional Risks division, said: “It is very encouraging to see that businesses have responded to the threat of litigation and are seeking appropriate cover at the highest level.  Although we are currently seeing an anomaly with claims increasing and rates falling, if litigious trends continue and loss costs accrue, then we may see some upward pressure on premiums, though there is little evidence of that happening in the short to medium term.”

*Copies of the full Aon survey, ‘2005 European Property, Liability and D&O Report – The Dynamics of Choice’, will be available from 3 October. Please email sally.taylor@aon.co.uk for a copy, or see www.aon.co.uk.


Notes to Editors

About the survey

The survey was completed by 34 European domiciled insurers and 38 European headquartered multinational companies during July 2005. The respondents were drawn from a wide range of industries including: pharmaceuticals, electronics, tobacco, transport, chemicals, leisure, steel, financial services, automotive, energy and waste management.

About Aon

Aon Corporation ( http://www.aon.com ) is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. There are 47,000 employees working in Aon's 500 offices in more than 120 countries. Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions.

This press release contains certain statements related to future results, or states our intentions, beliefs and expectations or predictions for the future which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results depending on a variety of factors. Potential factors that could impact results include: general economic conditions in different countries in which we do business around the world, changes in global equity and fixed income markets that could affect the return on invested assets, fluctuations in exchange and interest rates that could influence revenue and expense, rating agency actions that could affect our ability to borrow funds, funding of our various pension plans, changes in the competitive environment, our ability to implement restructuring initiatives and other initiatives intended to yield cost savings, changes in commercial property and casualty markets and commercial premium rates that could impact revenues, changes in revenues and earnings due to the elimination of contingent commissions, other uncertainties surrounding a new compensation model, the impact of investigations brought by state attorneys general, state insurance regulators, federal prosecutors, and federal regulators, the impact of class actions and individual lawsuits including client class actions, securities class actions, derivative actions, and ERISA class actions, the cost of resolution of other contingent liabilities and loss contingencies, and the difference in ultimate paid claims in our underwriting companies from actuarial estimates.  Further information concerning the Company and its business, including factors that potentially could materially affect the Company’s financial results, is contained in the Company’s filings with the Securities and Exchange Commission.