Midsize companies used to be able to get away with just tacking a little D&O liability coverage onto their employment practices liability. Not anymore

By Russ Banham

Before Sarbanes-Oxley changed the rules of civilized corporate behavior, many companies in the middle tiers of commerce and industry didn't even bother with directors' and officers' liability insurance. Those that did buy coverage went for D&O insurance, not because they feared litigation against their directors and officers, but because it was relatively cheap to secure. The prevailing wisdom was to blend employment practices liability (EPL) with D&O liability in a single policy, which was far less expensive than buying two separate policies. For most companies, the added D&O amounted to a 10% to 15% premium on the cost of their EPL coverage. "It was the threat of employment practices liability that really got companies in the door–not the D&O insurance," says Ann Longmore, senior vice president and product leader at New York-based insurance broker Willis Executive Risks. "The added D&O coverage only sweetened the deal."