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Most D&O risk assessments only involve surveying the insurance purchasing habits of major corporations and some also include a review of large past D&O claim losses. Global insurance broker
In a new report, Assessing D&O Risk for Publicly Traded Corporations, Gallagher's Management Liability Practice showcases the effectiveness of its proprietary D&O Modeling EvaluationTM (DOME), which it introduced in 1999. For the past 17 years, Gallagher has continuously refined and tested DOME TM against other evaluation tools and actual client experience to enhance the tool's accuracy. Now it is offering a peek under the hood.
"To the potential detriment of directors and officers, assessing D&O risk through benchmarking alone can be flawed. Integrating DOME with traditional benchmarking and claims reviews increases the accuracy of D&O risk evaluations. This approach enables public companies to better protect their balance sheets and the personal net worth of their directors and officers," says the report's author, Dr.
"When we recently retested DOME's accuracy, we took actual settlements and went back to see what loss costs our model would have predicted before those claims occurred," he noted. "The correlation between the model results and the actual claim values was approximately 90%, thus validating the effectiveness of the model."
"Our DOME model continues to be a true differentiator and one of our strongest tools in reducing our clients' total cost of risk," says
Gallagher's Management Liability Practice developed DOME by collecting more than a decade of D&O losses, company exposures and trading statistics, and then creating its own proprietary models and algorithms, which rely wholly on client exposure data to project potential liabilities. Projections utilizing DOME's predictive methodology can be made well in advance of potential claims, thus increasing the likelihood that clients will have sufficient coverage limits in place if and when a claim arises.
The report also compares key components of DOME projections with independent results published in D&O studies released by
Assessing D&O Risk for Publicly Traded Corporations is available for free download on Gallagher's website at www.ajg.com/assessingdandorisk/.
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