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The stock-options-backdating scandal is starting to have some wider reverberations.

In the wake of the initial reports that some companies had suspiciously handed out favorably priced options to executives, the affected stocks tumbled, and analysts started investigating which companies -- and stocks -- would be the next likely suspects.

Amid the scrutiny and uncertainty, the broader market plunged, and some analysts have blamed this in part on the scandal.

Now comes the hint of a possible aftereffect: greater scrutiny from the insurance industry.

Companies accused of backdating will have a tougher time renewing their policies that cover the actions taken by directors and officers, industry experts say. Worse yet, even the companies that are perfectly innocent could face tough questions about their options plans -- and, as a result, potentially higher rates.

"We believe that D&O

directors and officers insurers' concerns about their exposure to option-grant claims will have a significant impact on the current D&O insurance cycle for all public companies," says John Doernberg, the senior managing director of Carpenter Moore, an insurance brokerage owned by the


, in a note to clients last week.

Directors and officers' policies typically cover payouts for shareholder lawsuits, and even regulatory fines. Without it, companies themselves -- or their directors personally -- would be responsible for the claims.

In general, D&O policies come up for renewal once a year, at which time the rates and terms are the subject of renegotiation.

To calculate the risk for having to insure backdating claims, insurance firms are doing their own investigations of options plans and grants, those in the industry say. At the very least, public companies that have dished out options in the past should be prepared to give out detailed information to insurers about their grants.

"We've done our own analysis" of the backdating issue, says John Doyle, president of

American International Group's

(AIG) - Get American International Group Inc. Report

National Union Fire Insurance subsidiary, which specializes in D&O insurance. "We have basically put a process into place to try to make ourselves aware of the exposure that may exist."

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Thus far, some 30 companies are under investigation for their past options-granting practices. The companies are generally accused of setting strike prices for options they handed out to executives long after the options were actually granted, i.e., when the stock's movement was known. Companies involved in the scandal could potentially face huge regulatory fines or lawsuit judgments or settlements.

Several of National Union's clients are already being investigated for backdating, Doyle says. "The company hasn't decided yet how to handle the claims or what its ultimate liability might be," he says. "It's very early in those discussions."

But companies under investigation -- and those that stand the risk of being investigated -- are likely to see rising rates or more restrictive policy terms. On average, companies with market caps of more than $10 billion paid an average premium of about $4.3 million for directors' and officers' insurance last year, according to a survey by the consulting firm Towers Perrin's Tillinghast division. That amount was down from the year before, when such companies paid about $5.1 million.

"It shouldn't be a surprise" if rates go up, says Lynn Turner, managing director of research at proxy advisor Glass Lewis. "They have a higher risk. You can't blame the insurance companies for that."

Specifically, insurers such as AIG may try to exclude coverage of backdating claims from their policies. And insurers could even decline to renew policies at some companies considered most at risk.

Either decision would leave shareholders footing the bill entirely for fines or lawsuits resulting from the backdating scandal.


companies are not able to show that

they haven't done any backdating, I would expect that kind of behavior," says Steve Shappell, managing director of the legal and claims practice at the financial services group of Aon, an insurance brokerage.

But even companies not caught up in the scandal might feel its effect. Insurers are likely to pursue more restrictive clauses about backdating across the board, warned Doernberg in his note to clients.

"Some insurers ... may try to impose or negotiate wording that would make it more likely that one or more of the standard policy exclusions will be triggered in the event of a claim," he said. "Small differences in policy wording can have an enormous impact on the availability and extent of coverage in option-grant claims and in many other types of claims."

And Doyle warned that depending on how widespread the options scandal turns out to be, companies across the board could face higher premiums on their D&O policies. Although such premiums have declined in recent years, the backdating scandal is just one more risk that insurers face in an environment where companies already face increased scrutiny, he said.

"There' s probably more uncertainty

about corporate insurance claims right now than ever before," he said. Assuming the backdating scandal is widespread, "it absolutely will have an effect on price, and terms and conditions as well."

However, other insurance experts doubt the scandal will affect general corporate premiums. There's still a lot of competition in the market to underwrite directors' and officers' insurance, and prices have declined in recent years, notes Shappell.

But even Shappell acknowledges that some insurers may take a broader-brush approach in writing policies this year as a result of the scandal. Instead of just targeting specific companies, the industry may try to raise rates on sectors considered more at risk,

such as the technology sector, which has seen the bulk of the backdating investigations to date, he says.

"This is one more issue where you're going to have to spend time preparing for meetings with underwriters to explain that you are not at risk," Shappell says.