Squeezed by Class-Action Suits, Insurers Are Finally Responding

Stung by near-record levels of federal securities class-action lawsuits, firms that insure company executives are taking action.

Rates for directors-and-officers policies are rising in response to heightened levels of litigation that typically involve allegations of misleading investors. American International Group Inc. estimates that the industry took in about $4 billion in premiums from public-company clients in the U.S. for such policies last year, which is dwarfed by the estimated $6.1 billion in losses that insurers faced from them.