has been the "enormous'' amount of aggregating of insurance coverages under one limit, believes David Lupica of Starr Excess Liability Insurance Company Ltd.

According to Mr. Lupica, vice president of the company's financial services department, the trend started in 1995 as a result of the soft market, "picking up steam'' in 1996.

Largely driven by the broking community, it sees different types of insurance combined under one limit.

Prior to the soft market, a client may have bought four different forms of cover -- D & O's, professional liability (also known as errors and omissions), fidelity and fiduciary -- separately. Now, they are able to buy various lines under one policy and one limit.

Combining coverages under one limit benefits everyone in the short term but is apt to have future repercussions if the programme needs to be dismantled, he added.

By combining and reducing limits, corporations are saving on insurance costs, said X.L. Insurance Company Ltd. senior vice president Jim Ansaldi.

But combining D&O, E&O, fidelity, and fiduciary under one limit "in the long run will be detrimental'' as it "reduces the amount of premium available to support future losses.'' Corporations are purchasing a lower limit, betting they will not have a claim in each line in a year.

"It's a good situation for the buyer (who is) spending less for the same coverage. The danger is that one loss could erode the entire policy,'' Mr.

Ansaldi said.

He described the D&O market as being currently at the "bottom of a slide'' with "no upward hill in view.'' And he said it was worse than the last soft market in 1983/84 because underwriters have extended coverages.

Prior to the soft market, D&O policies did not cover 100 percent of a claim against a corporation. Lawsuits would generally name a company and individual(s) and when a court made an award, costs were allocated -- a portion of the responsibility to pay lay with the company and a portion with the individual.

Underwriters are accepting the same premium for full exposure and companies are getting double the coverage for half the premium, Mr. Ansaldi said.

He predicted the timing of the next turn in rates will be when these underwriting decisions start appearing in courtrooms.

The problem is not underwriting extended coverage, it is not charging for, Mr.

Ansaldi said.

"The market is so soft, rates couldn't go any lower. Rates are at an all time low,'' Mr. Lupica added.

He agreed that the D&O policy has never been broader.

"Traditionally, the policy has been for corporate officers, now entities are named as insureds. This, when it happened in 1995, was a significant enhancement to the policy.'' Starr Excess offers general liability, D&O liability and E&O insurance.

The company issues policies with a minimum attachment point of $25 million and offers capacity of up to $25 million for professional, $50 million for D&O and $150 million for general liability cover.

Starr Excess, set up in 1993 by American International Group, Inc. and General Re Corporation, entered the professional liability market just over six months ago. During 1996, the company bound over $4 million in new professional liability business.

Ultimately for the D&O market to harden, some of the industry's larger players will need to suffer losses, Mr. Lupica said.

According to ACE Ltd., D&O continues to be extremely competitive.

For 1996, net D&O premiums written contributed 16 percent of ACE's total premium written.

"Our well established CODA product has a form that is unparalleled. CODA innovated a coverage to protect the personal assets of individual directors and officers when a corporation could not or would not pay,'' ACE said in its latest annual report.

"ACE Plus is a new product which, like CODA, protects individual directors and officers.'' The product allows clients to customise the D&O coverage with each element priced individually.

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