The directors and officers liability insurance market strikes me as a fascinating place these days, and I wonder if it's on the verge of becoming even more so.

A lot's been written lately about the D&O market softening, while new players continue to enter the marketplace. The combination seems counterintuitive, but, according to the experts, it's the result of the line remaining profitable even in the face of lower rates due to a downturn in claims frequency (though severity appears to be heading upward).

But from some things I've read and heard lately, I wonder if the frequency of D&O claims might be heading back north sometime soon.

The entire stock option backdating issue is still being resolved, though most seem to feel its impact on the D&O market will be limited. I wonder, though, if its bigger impact might be as another log on the fire of public discontent with big business, with whatever repercussions that might have in terms of future litigation activity and juror attitudes.

As an example of that discontent, I cite a Los Angeles Times/Bloomberg poll released last week showing that most U.S. residents think companies' chief executive officers are paid too much and doubt their sense of ethics.

Given the news coverage that's been devoted to CEO salaries, and the obvious chasm between the salaries reported in those stories and the average worker's income, it's no surprise that most of those surveyed felt that CEOs are overcompensated. But the margin--81% thinking CEOs are paid too much, according to L.A. Times/Bloomberg, vs. 14% who think they're being paid the right amount (and 1% who think they're paid too little, presumably the CEOs who happened to be surveyed)--was pretty stunning, I felt.

Among those thinking that CEOs are overpaid, 80% were from households making more than $100,000 a year.

As I indicated, the survey group also doesn't think CEOs are a particularly ethical lot, with 61% saying CEOs of U.S. companies are not ethical in their business practices--including 18% who say CEOs aren't ethical at all--vs. 33% who said they think CEOs are mostly ethical. The group saying they think CEOs are unethical included 45% of those identifying themselves as Republicans--traditionally the party of business.

I guess a distrust of business is not unusual, but I'm kind of struck by the size of the majorities on those two questions. And, as we head into a national election cycle that I suspect will feature a fair share of populist rhetoric, I wonder if those attitudes might grow, and what the ramifications might be for American business.

Another trend that makes me curious about what's in store for the D&O market is the current wave of private equity investment buyouts involving all sorts of businesses.

Several weeks ago, the Cerberus private equity firm announced it was buying automaker Chrysler, Sam Zell is in the process of purchasing media conglomerate (and Chicago Cubs owner) Tribune Co. and obviously private equity funds have been quite active in the insurance industry of late.

Evidently, private equity is even showing quite an appetite for technology companies these days, an area that not too long ago seemed to be a virtual Petri dish for growing D&O claims.

Last month, my BI colleague Judy Greenwald wrote a story about the new D&O risks created by private buyout deals, suggesting that there could be a variety of different D&O exposures at either end of a deal's life cycle, first at the initial buyout and then again when the investors take the company public (BI, May 14).

There could be fascinating times ahead.