MUNICH (Bloomberg) - Allianz SE, Europe's biggest insurer, is optimistic on the outlook for directors and officers (D&O) insurance after claims peaked and prices began rising in some industries, company executives said.

"D&O insurance is a very, very interesting area and will become even more so," Axel Theis, the head of Allianz Global Corporate and Specialty AG, said at a press conference in Munich. "Premiums are rising in financial institutions coverage, but that hasn't yet spilled over to other lines."

Companies routinely buy D&O coverage from insurers such as Munich-based Allianz, American International Group Inc., XL Capital Ltd. and Chubb Corp. to protect executives from claims and legal costs related to management decisions. D&O rates, falling since 2003, will probably rise or stabilise next year, depending on the industry, Allianz said.

For financial institutions, prices may increases 50 percent to 60 percent, said Hartmut Mai, global head of financial lines at Allianz's industrial insurance unit.

"The financial lines business will be negative in 2009, but that does not bother me too much as we have already seen the peak of claims in industrial lines and thus are more optimistic for 2010 and 2011," Mr. Theis said. "Furthermore, as D&O claims can take some time to materialize, we are reserving very conservatively."

D&O insurance doesn't cover executives' dishonest or fraudulent acts. Most policies include legal defense costs if a claim is brought in relation to an action that was not intentional.

The global D&O market generates annual premiums of seven billion euros ($10.3 billion) to 8 billion euros, with Europe accounting for about 1.4 billion euros of the total and the US as much as five billion euros, Allianz estimates.

German D&O premiums amount to about 300 million euros annually, with Allianz's share at about 85 million euros, the company said.

Large corporations typically buy D&O coverage from a group of providers headed by a so-called lead insurer, which negotiates terms and conditions.

Coverage for large corporations can reach as much as 500 million euros in Germany, Allianz's Mr. Mai said.

Siemens AG, Europe's largest engineering company, said on December 8 it agreed to a settlement of as much as 100 million euros with its D&O insurers in connection with corruption cases. Units of Allianz, Zurich Financial Services AG, Ace Ltd., Liberty Mutual Group Inc. and Swiss Reinsurance Co. will pay the amount, which compares to total coverage of 250 million euros bought by Siemens.