Higgs, the Lloyd's franchise board and D&O price rises are conspiring to kill off the boardroom risk-takers, says Elliot Lane

City guru Alastair Ross Goobey, speaking at a RPC-sponsored D&O seminar last week, made a poignant observation on the latest Higgs Report. "We would be foolish to destroy the taking of risk in the boardroom. That's exactly what makes a business and how it can progress."

Tell that to the creditors of disgraced broker Ward Evans. But, hopefully, the footballers' lifestyle of its directors was an aberration and Goobey makes a valid point.

A derogation of duty by directors should be brought to book and stiff penalties levied, but entrepreneurial spirit should not be the first casualty in the regulatory war.

Interestingly Goobey is a nominated member of the Council of Lloyd's. This is one marketplace where stringent rules are desperately needed. But its strength is that the pioneering and entrepreneurial spirit thrives, and is why much criticism has been heaped on the proposed franchise system - Lloyd's is not McDonald's.

Its syndicates produce hundreds, if not thousands, of diverse products.

Directors' and officers' (D&O) is the next crisis in waiting. While the industry grapples with the employers' liability issue, slowly and steadily the lack of capacity and huge premium hikes in D&O cover will start to strangle UK business.

It has already scuppered the IPO market in the US.

The main reason Benfield Greig has gone cold on its flotation in New York is the new Sarbanes-

Oxley Act initiated after the Enron scandal. It makes no distinction between US and non-US companies and effectively catches all UK companies with a dual listing in the US or those with American Depository Receipts.

Every director working for the company has to be adequately covered by the D&O policy. On average it would cost Benfield an extra $8m - $10m (£5.1m - £6.4m) for every director to be covered and for it to comply with the US SEC filing rules.

HSBC's D&O policy is up for renewal on 1 May 2003, but the serious worry is that the market does not have the appetite for it.

Another development is the new policy wordings in some D&O cover. One form has the exclusion of any breach of duty by directors and non-executives or "any alleged breach".

So, companies are paying ten times more on the premium for, in fact, no insurance whatsoever.

Corporate governance is more prevalent than ever. But it is about being sensible too.