Marsh Enhances D&O Liability Modeling Capabilities

November 19, 2010

Given today’s heightened scrutiny on publicly traded companies and the proliferation of securities class action lawsuits, properly insuring corporate directors and officers has taken on profound importance. Determining the appropriate amount of directors’ and officers’ (D&O) liability coverage to purchase, however, can be a challenge.

Marsh has introduced IDEAL 2.0, an enhanced modeling tool that enables risk managers to analyze the severity and probability of securities class action lawsuits against their organizations. IDEAL 2.0 arms risk managers with powerful data to guide D&O limit purchasing and retention decisions.

IDEAL (Identify Damages, Evaluate, and Assess Limits) was developed by Marsh Business Analytics, a unit of Marsh dedicated to delivering analytic solutions to clients, and FINPRO, Marsh’s financial and professional liability practice.

Since first introduced in January 2010, IDEAL’s ‘severity’ model has been helping Marsh’s clients project a full range of securities class action settlement outcomes. This is done by using historical settlement data and client-specific independent variables such as market capitalization and total assets.

Now, in addition to settlement projections, clients using IDEAL 2.0 also can assess the likelihood that their organization will incur a securities class action claim.

“As publicly traded organizations face increased scrutiny from several sources in the current economic environment, risk managers need the tools to make more informed, data-driven decisions,” said Greg Spore, Risk Metrics and Analytics Leader, Marsh FINPRO . “Combining IDEAL’s two models of predictability and severity, risk managers can more effectively analyze their potential costs, and improve the efficiency of their D&O insurance programs.”

Ben Fidlow, National Practice Leader for Marsh Business Analytics, was named a 2010 Risk Innovator by Risk & Insurance for his role, with Spore, in the development of IDEAL’s severity model.

Source: Marsh

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