The rising cost of Directors' & Officers' (D&O) insurance has forced risk managers to investigate alternative forms of cover, warned Airmic, the Association of Insurance and Risk managers.
According to a report, a survey of UK risk managers by Airmic revealed that 84% of those asked said they had either started to indemnify directors themselves as a substitute for some types of D&O cover, or were considering doing so.
Of those surveyed, 81% were using Alternative Risk Transfer mechanisms, such as captive insurance companies, while 58% were interested in legal cost insurance as a substitute for D&O.
The report revealed that 39% were considering or using bonds or letters of credit as an alternative. It said that 48% were attracted to the idea of a mutual D&O insurance project.
Airmic executive director David Gamble said: "There's no question from our recent discussions that the recent steep increases in D&O premiums have prompted many risk managers to start using or at least investigating alternatives to insurance.
"One of the reasons cited most often is that underwriters are oblivious to the efforts of those companies that do all they can to reduce the chances of a claim.
"On a more positive note, I am happy to report that insurers and brokers are genuinely listening to what we have to say, and there's evidence of more capital coming into the market," he concluded.
