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Today's business climate presents a wide variety of threats to the financial well-being of
an organization. These risks include potential liability from products manufactured
and exported, ingredients or component parts imported, and employees providing services
around the globe. The convergence of exposures makes establishing an appropriate
limit of liability a challenging task.
Protection against potential catastrophic loss is the objective behind the purchase of
excess liability coverage. Such coverage should respond to occurrences considered
low-frequency/high-severity events that are typically unexpected and consequently
not contemplated in business planning. The perceived benefit of paying premium for
protection deemed unnecessary because of the lack of a significant loss must be
contemplated. Management's response must weigh the cost of adequate coverage
against a company's realistic exposure to a disaster.
Price plays a significant role in most purchases, but other factors bear scutiny. This 17th
annual edition of Limits of Liability ventures to facilitate finding the balance between
the cost of excess liability insurance and coverage needs. Achieving that equilibrium
requires a blend of art and science.
Marsh's internal database of excess casualty placements is the source of our analysis
for Limits of Liability 2008. The number of programs compiled for the report is
exceptionally large-the population comprises 7,723 firms located in 51 countries.
These numbers make the data less subject to anomalies and offer great credibility
that the results represent a clear picture of the excess liability insurance marketplace.
We assess the data in two ways. First, we present a broad view of limits purchasing
by comparing the full population statistics through the first half of 2008 with similar
information for the prior year. Next, we isolate purchasing trend data for a subset of
companies for which we have consecutive years of data.
Although the outcomes afford an important statistical perspective, they only provide a
framework for evaluating the adequacy of coverage. Prudent risk management must
also balance the scientific data against company-specific factors and experience in
determining what is right for a particular firm. To support the process, this report
also presents relevant trends in the cost of wrongful death and injury, including court
decisions and jury awards.
Limits of Liability 2008 presents an array of quantitative and qualitative information,
intended to help companies gauge the amount of excess liability insurance to purchase.
Read or download the report.
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