In December, Cardinal Health Inc. got all its ducks lined up in a row before sitting down with the insurers of its directors and officers liability program. "We provide access to all publicly disclosed financial records, including our balance sheet and any litigation against us, to obtain the best pricing, terms and conditions," confides Linda Harty, executive vice president and treasurer of the $87 billion global manufacturer and distributor of medical supplies. "Not only did we get the same terms and conditions as the expiring D&O policy, we were able to renew the program at a lower price."
Dublin, Ohio-based Cardinal Health's experience shows what it takes for companies to achieve a good deal as current D&O policies expire. Rattled by a substantial hike in the number of securities class action lawsuits against corporate officers and directors, the D&O market is beginning to tighten. Financial services firms are in the worst position because most D&O litigation is aimed their way. There were 210 federal securities class actions filed in 2008, a 19% increase from 2007, and half of them--103 lawsuits--involved financial services companies, according to Stanford Law School and Cornerstone Research.