As with just about every impact of the financial crisis on the insurance industry, the increase in securities class action lawsuit settlements wasn't as bad as the industry expected.

According to a study by Stanford Law School and Cornerstone Research, settlements grew only 39% year over year in 2009. Insurers and reinsurers writing directors and officers insurance in the U.S. are probably relieved to see that the reality didn't reach what they feared. The number could tick higher, though, as these cases work their way through the court system.

A rapidly hardening property insurance market in the first half of the year slowed down a little bit in the third quarter, according to insurance broker Aon (AOC). Property rates increased 4% to 5% on average, with some corners of the market surging more than 20%, during the first half 2009. In the third quarter, rates were up an average of only 0.2%.

Low levels of insured loss have contributed to strong profits for property carriers, and the industry's surplus is up $463 billion -- all of which means there is little reason to pump up insurance rates. Rates should remain stable for the rest of the year.

Everyone's favorite corporate outhouse/welfare diva Bank of America (NYSE: BAC) has begun its search for directors to replace deposed former chairman Ken Lewis, along with any other directors who might step down.

The company is also considering changes to its board structure that could result in a search for more new blood, but the Wall Street Journal reports (subscription required) that the ward of the state hasn't yet hired a firm to find new directors.

With a wave of shareholder meetings about to hit the United States, directors could be in for the first real test they've faced in a long time.

With shareholders looking at portfolio statements showing losses of 30%, 40%, 50% and more, directors are expected to face a tougher time retaining their seats. And a new trend of brokerages changing the way they vote customers' shares could make changes even more likely.

As though we needed another reason to be disgusted with corporate governance in the United States, here's a gem from The Wall Street Journal (subscription required): "So far this year, 46 outside directors who are CEOs or chief financial officers left the boards of 42 companies in three struggling industries -- financial services, retail and residential construction -- concludes an analysis for The Wall Street Journal by Corporate Library in Portland, Maine."

Directors at companies like Ford (NYSE: F), General Motors (NYSE: GM), Sprint Nextel (NYSE: S), and American International Group (NYSE: AIG) have been resigning, citing the huge amount of time required to be a director at a company faces extinction.

Oh where to begin. First of all, isn't it a little bit messed up to go along collecting a salary in the $150,000 per year range (which is what GM directors are paid) to go to a few meetings a year when times are good, and then head for the hills when the going gets tough? Isn't that like working for ten years as a security guard at a posh country club without incident and then calling in your resignation at the first sight of a burglar?

Most reasonable people -- even the most laissez-faire among us -- accept that excessive executive compensation completely out of line with performance is a serious problem in America.

Too often though, this gets debated as a populist issue with congressional hearings and rants from union activists. But at its core, excessive compensation is a corporate governance issue and the ones getting screwed over are the shareholders.

In a great column in the Sunday New York Times, Ben Stein explains the real root of this problem: supine boards of directors, motivated by cushy relationships with CEOs, perks based on kissing asses instead of creating value, and no real skin in the game.

The solution to this should be pretty simple, and it has nothing to do with protests, newspaper columns, or passionate (and televised) congressional hearings. What we need are more activist investors, rigorous enforcement of laws requiring that institutional investors vote their shares in the best interests of their fiduciaries, and for the SEC to improve proxy access rules, making it easier for shareholders to unseat under-performing directors. Unfortunately, the SEC under Republican leadership has backed the interests or entrenched -- and lousy -- executives and directors, not the interests of shareholders. That's wrong.

As Randy Cepuch wrote in his book A Weekend with Warren Buffett, the notion of corporate democracy is "pretty much a myth." That's going to have to change, or our country's competitiveness will be seriously jeopardized.

In a clear signal that outside directors can and will be held responsible for poor oversight of the companies they are involved with, five former directors of the defunct shoe retailer Just For Feet have agreed to pay $41.5 million to settle a lawsuit. According to the Wall Street Journal, the personal settlement by the directors of Just for Feet far exceeds the settlement agreed to by Worldcom and Enron independent directors. Just for Feet collapsed in 1999 in the midst of a massive accounting fraud, and filed for bankruptcy shortly thereafter.

The Directors didn't admit or deny wrongdoing as part of the settlement, but this has to be considered a victory for shareholders. While Jeff Skilling and Bernie Ebbers became the poster-children for bad corporate governance, the media seemed to forget that the board's job was to prevent that kind of thing from happening. Perhaps now directors will take their jobs more seriously. To many, being a director of a large public company appears to be an easy payday. But they are the shareholder's first line of defense against overcompensation, incompetent management, and fraud.