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DEFENSE COSTS AND COST CONTAINMENT EXPENSES AS A PERCENT OF INCURRED LOSSES, 2008-2010 (1)

herer($000)
  2008 2009 2010
  Amount As a percent of incurred losses Amount As a percent of incurred losses Amount As a percent of incurred losses
Medical malpractice $1,865,598 58.3% $1,886,557 57.2% $1,808,104 61.4%
Products liablity 1,028,628 63.8 1,028,628 63.8 895,591 57.0
Commercial multiple peril (2) 1,811,415 34.3 1,799,507 43.7 1,880,941 44.7
Other liability 4,835,297 25.5 5,174,214 24.8 5,289,585 25.6
Workers compensation 2,642,574 11.8 2,407,144 10.8 2,492,843 11.2
Commercial auto liability 1,070,040 10.7 963,574 10.3 929,009 10.6
Private passenger auto liability 3,595,860 5.9 3,928,788 6.3 3,946,317 6.2
All liability lines $16,849,412 13.8% $17,188,412 13.8% $17,242,390 13.8%

(1) Net of reinsurance, excluding state funds.
(2) Liability portion only.

Source: SNL Financial LC.

COST OF U.S. TORT SYSTEM, 1990-2010

COST OF U.S. TORT SYSTEM, 1990-2010

U.S. FIRMS EXPERIENCING A LOSS OF $5 MILLION OR MORE, 2003-2007 (1)

U.S. FIRMS EXPERIENCING A LOSS OF $5 MILLION OR MORE, 2003-2007 (1)

GROWTH OF TORT COSTS, 1951-2007

Years Average annual change
in tort system costs
1951-1960 11.6%
1961-1970 9.8
1971-1980 11.9
1981-1990 11.8
1991-2000 3.2
2001 14.7
2002 13.4
2003 5.5
2004 6.0
2005 0.4
2006 -5.6
2007 2.1
57 years (1950-2007) 9.0%
Source: Tillinghast-Towers Perrin.

U.S. AVERAGE EXCESS LIABILITY LIMITS RELATIVE TO LOSS EXPERIENCE, 2004-2008

U.S. AVERAGE EXCESS LIABILITY LIMITS RELATIVE TO LOSS EXPERIENCE, 2004-2008

CASUALTY COST OF RISK PER $1,000 OF REVENUE, 2006-2007

CASUALTY COST OF RISK PER $1,000 OF REVENUE, 2006-2007

TYPES OF DIRECTORS AND OFFICERS LIABILITY CLAIMS, 2001-2010 (1)

TYPES OF DIRECTORS AND OFFICERS LIABILITY CLAIMS, 2001-2010 (1)

DIRECTORS AND OFFICERS LIABILITY CLAIMS BY TYPE OF CLAIMANT IN THE UNITED STATES, 2001-2010 (1)

DIRECTORS AND OFFICERS LIABILITY CLAIMS BY TYPE OF CLAIMANT IN THE UNITED STATES, 2001-2010 (1)

DIRECTORS AND OFFICERS LIABILITY CLAIMS BY BUSINESS OWNERSHIP, 2001-2010 (1)

DIRECTORS AND OFFICERS LIABILITY CLAIMS BY BUSINESS OWNERSHIP, 2001-2010 (1)

TRENDS IN EMPLOYMENT PRACTICES LIABILITY, 2004-2010

Year Median (midpoint) award Probability range (1)
2004 $187,583 $56,750-$426,490
2005 188,000 50,000-500,000
2006 165,000 50,000-467,445
2007 177,805 56,000-725,000
2008 266,024 69,250-728,750
2009 215,000 65,236-624,537
2010 182,500 50,000-392,500

(1) The middle 50 percent of all awards arranged in ascending order in a sampling, 25 percent above and below the median award.

Source: Jury Verdict Research.

PREVALENCE OF EMPLOYMENT PRACTICES LIABILITY (EPL) COVERAGE BY OWNERSHIP, 2008

  No EPL Stand-alone EPL D&O with EPL
Nonprofit 17% 4% 79%
Private 17 36 47
Public 8 22 70

Source: 2008 Directors and Officers Liability Survey, Towers Watson.

POST-REFORM ACT SETTLEMENTS OF SECURITIES LAWSUITS, 1996-2010 (1)

  1996-2009 2010
Minimum $0.1 million $0.5 million
Median 7.6 million 11.3 million
Average 54.8 million 36.3 million
Maximum 7.8 billion 624.0 million
Total settlements $61.6 billion $3.1 billion

(1) Private Securities Litigation Reform Act of 1995; adjusted for inflation.

Source: Cornerstone Research.