Paul Major knows his As, Bs and Cs, and his D&O, too. When he signed on as the director of insurance at Metris Companies Inc. in September 2001, Major swiftly gutted its directors and officers liability insurance program, deciding that more limits of financial

protection had to be added. Most importantly, he bought an additional D&O insurance policy that resides on top of the underlying policy to provide added protection in case the first policy's financial limits are exhausted. Called Side A D&O insurance, the policy also absorbed added risks, such as derivative claims by shareholders brought on behalf of the company against its directors and officers.

Give Major credit: One year after securing the Side A insurance, Metris, a credit and finance company with $8.1 billion in credit card receivables, was hit with a classic shareholder stock drop lawsuit that is still wending its way through the court system. "It was serendipitous, I guess," says Major, a former risk manager at UnitedHealthcare. "We put together $10 million in excess Side A coverage that expired after the claim came in. Then, when we renewed our D&O program in 2002, we took on much more Side A coverage– $45 million above our blended D&O, fiduciary, crime and E&O [errors and omissions] program. I just renewed the program again and was able to add DIC [difference in conditions] coverage to the Side A, giving our directors and officers even broader protection at a cost commensurate with what we paid for our last program."