Conditions are ripe for a hardening of the directors and officers (D&O) liability insurance market, according to XL Insurance Company's senior vice president.

When asked to predict when the next hard market would occur, Mr. James Ansaldi said: "The ingredients are in place for a hard market. The underwriting community is doing the same things they were doing in the 1980s.'' Mr. Ansaldi was among a panel of four D&O specialists speaking on Friday at the two-day 26th Watson Wyatt Worldwide D&O liability symposium held at Marriott's Castle Harbour.

Other members of Friday morning's panel on D&O underwriting issues were; ACE Ltd. D&O underwriting head Mr. Mark Herman, Chubb Atlantic Indemnity Ltd. vice president and underwriting manager Mr. Kevin Rehnberg, and General Reinsurance Corp.'s second vice president Mr. David Allen. Mr. Allen previously was vice president responsible for excess directors and officers insurance and special situations at Starr Excess Liability Insurance Company Ltd.

"The losses we (Watson Wyatt) talked about yesterday (Thursday) are consistent with what Jim (Ansaldi) is saying,'' said Wyatt consultant Mr.

Phillip Norton.

On when the market would harden he said: "We will wait and see.'' Current descriptions of the D&O market, historically underwritten on a claims-made basis, range from "soft'' to "very soft''.

In the most recent Watson Wyatt D&O liability survey, which included responses from 1,231 companies writing D&O coverage, "claim frequency took a large (and very real) upward jump in 1994.'' Companies with more than $1 million assets, last year reported 336 claims. The average loss was $15.8 million while the total D&O claims across that $1 million plus group was $5.1 billion.

Claims severity is also on the rise, said Mr. Norton.

"The area of D&O liability has moved into a setting which presents unprecedented exposure to directors and officers and thus to D&O liability carriers,'' said lawyer Mr. Dan Bailey.

D&O expert Mr. Bailey, with the firm of Arter & Hadden, said: "Regulatory authorities, courts, shareholders, and the public in general have all increased their expectations concerning the conduct and integrity of corporate management,'' he said.

"As a result personal liability has become a primary concern for most directors and officers.''