The D&O Diary

The D&O Diary

A PERIODIC JOURNAL CONTAINING ITEMS OF INTEREST FROM THE WORLD OF DIRECTORS & OFFICERS LIABILITY, WITH OCCASIONAL COMMENTARY

Category Archives: D & O Insurance

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Bankruptcy Court Lifts Stay to Allow D&O Insurer to Pay Individuals’ Defense Expenses

Posted in D & O Insurance
As those involved in D&O Insurance claims well know, a recurring D&O insurance problem is the question of whether or not the D&O insurer for a bankrupt company can pay the costs of the bankrupt company’s former directors and officers incurred in defending claims against them. Disputes arise when the individuals seek to have the … Continue Reading

D&O Policy’s Professional Services Exclusion Does Not Preclude Law Firm’s Coverage for False Advertising Claim

Posted in D & O Insurance
Well-advised professional services firms will carry both errors and omissions insurance and management liability insurance. A recurring problem under management liability insurance policies for all types of professional services firms relates to the very broad professional services exclusions often found in these polices. These exclusions preclude coverage for claims relating to the professional services firm’s delivery of … Continue Reading

First Circuit: D&O Insurer Must Advance Failed Bank Directors and Officers’ Defense Expenses

Posted in D & O Insurance
In an interesting March 31, 2014 opinion (here), the Unites States Court of Appeals for the First Circuit, applying Puerto Rico law, affirmed a district court’s ruling that the D&O insurer for the failed Westernbank of Mayaguez, Puerto Rico must advance the bank’s former directors’ and officers’ expenses incurred in defending the FDIC’s suit against … Continue Reading

More About D&O Insurance Coverage for Subpoena Response Costs

Posted in D & O Insurance
As I have previously noted on this blog, a recurring insurance coverage issue is whether or not the costs incurred in responding to a regulatory or enforcement subpoena represent covered defense under a D&O insurance policy. In an interesting March 27, 2014 memo entitled “D&O Coverage for Subpoena Response Costs: An Emerging Consensus?” (here), Benjamin … Continue Reading

More About Stories We’re Following

Posted in D & O Insurance
IndyMac Coverage Suit Settled, But Oral Argument Will Stay on the Calendar?: As I noted in a recent post (here, second item), the parties in the IndyMac D&O insurance coverage action – that is, the dispute to determine whether or not only a single $80 million tower of insurance applies to the various D&O claims … Continue Reading

NY Court of Appeals Reverses Itself, Holds Insurer’s Breach of Duty to Defend Doesn’t Waive Coverage Defenses After All

Posted in D & O Insurance
In an unusual development in a closely watched case, K2 Investment Group, LLC v. American Guarantee & Liability Ins. Co., the New York Court of Appeals has reversed its own June 2013 ruling in the case in which it held that a legal malpractice insurer that breached its duty to defend is barred from relying … Continue Reading

Private Companies: Risks, Exposures and Insurance

Posted in D & O Insurance
In general, and at least in the United States, executives at public companies don’t need to be convinced that their companies need to have D&O insurance. That is not always true with officials at private companies. Some officials at some private companies – particularly very closely held private companies – are skeptical that they need … Continue Reading

Guest Post: Dispelling the Myths of Side A Directors and Officers Insurance

Posted in D & O Insurance
Many insurance buyers now regularly include a separate component of Side A insurance as part of their D&O insurance program. However, even though it has become an increasingly common part of many companies’ D&O insurance programs, Side A D&O insurance is not always fully understood. In the following guest post, Robert F. Carangelo and Paul … Continue Reading

D&O Insurance: Settlement of Antitrust Claim for Underpaid Wages Not Excluded “Disgorgement”

Posted in D & O Insurance
A settlement of an antitrust lawsuit alleging that a group of hospitals conspired to underpay their nurses did not represent excluded “disgorgement” and therefore was not excluded from coverage under William Beaumont Hospital’s management liability insurance policy, according to a January 16, 2014 Sixth Circuit decision. The opinion will likely be of particular interest to … Continue Reading

Kiwi Supreme: Claimants’ “Charge” on D&O Insurance Blocks Payment of Directors’ Defense Costs

Posted in D & O Insurance, International D & O
In a December 23, 2013 ruling that will be surprising and unwelcome to D&O insurers and their insureds in New Zealand (and perhaps elsewhere) , the New Zealand Supreme Court has reversed the holding of an intermediate appellate court and ruled that, by operation of a statutory “charge” on insurance in favor of third party … Continue Reading

D&O Insurance: Health Care Organizations Face Increasing Rates, Tightening Terms

Posted in D & O Insurance
Largely as a result of changes in the industry following the enactment of the Affordable Care Act, health care organizations have seen their D&O insurance rates increasing and the available terms and conditions tightening, according to a December 10, 2013 report from Marsh. Moreover, these changes are likely to continue in 2014, according to the … Continue Reading

Reps and Warranties Insurance: Multiple-Based Damages Claims

Posted in D & O Insurance, Failed Banks
The purchase of reps and warranties insurance is an increasingly common element of mergers and acquisitions transactions. But while the uptake of reps and warranties insurance has increased, concerns remain about how a reps and warranties insurance will respond if a claim arises based on an allegation that a seller has breached a financial statement … Continue Reading

D&O Insurance: Professional Services Exclusion Precludes Coverage for Claims Arising From Broker-Dealer’s Offering Underwriter Activities

Posted in D & O Insurance
On November 21, 2013, in a terse, two-page summary order (here), the Second Circuit affirmed a district court ruling applying New York law and holding that a D&O insurance policy’s professional services exclusion precludes coverage for claims brought against  broker-dealer David Lerner Associates, based on the firm’s offering underwriter and financial products sales activities. The … Continue Reading

More About D&O Insurance and Bankruptcy

Posted in D & O Insurance
Although D&O insurance represents an important risk management tool for every company, the protection that a D&O insurance policy affords directors and officers is particularly important in the bankruptcy context, when the company is no longer able to indemnify the individuals. Yet, as industry practitioners know, a number of issues recur in the bankruptcy context, … Continue Reading

D&O Insurance: Known Circumstance Exclusions

Posted in D & O Insurance
D&O insurance policies often address a policyholder’s particular circumstances. One way that D&O insurers sometimes address the fact that a company has experienced adverse circumstances is to incorporate into its policy a “known circumstances exclusion” precluding coverage for those circumstances. In an October 23, 2013 opinion (here), the First Circuit affirmed the opinion of the … Continue Reading

More About the D&O Insurance Implications of the SEC’s New Admissions Wrongdoing Requirements

Posted in D & O Insurance
Numerous questions surround the SEC’s new policy requiring enforcement action defendants in “egregious” cases to admit to wrongdoing in order to settle with the agency, rather than simply agreeing to neither admit nor deny the agency’s allegations. As I discussed in a prior post (here), among the questions is the issue of what the impact … Continue Reading

FDIC Statement Inveighs Against D&O Insurance Exclusions and Coverage for Civil Money Penalties.

Posted in D & O Insurance
In an unusual step, the FDIC, the federal regulator responsible for insuring and supervising depositary institutions, has weighed in on financial institutions’ purchase of D&O insurance. The FDIC’s October 10, 2013 Financial Institutions Letter, which includes an “Advisory Statement on Director and Officer Liability Insurance Policies, Exclusions and Indemnification for Civil Money Penalties” (here), advises … Continue Reading

E&O Insurance: Acts Alleged in Underlying Claim Did Not Involve Insured Services

Posted in D & O Insurance
One of the recurring coverage issues that arises in connection with Errors and Omissions (E&O) Insurance is the question of whether or not the activities that are the basis of the underlying claim involve Insured Services (or Professional Services) as that term is defined in the policy. In a September 27, 2013 decision (here), Northern … Continue Reading

D&O Insurance: Insured vs. Insured Exclusion Unambiguously Precludes Coverage for FDIC Failed Bank Lawsuit

Posted in D & O Insurance, Failed Banks
One of the recurring D&O insurance coverage issues that has arisen during the current wave of failed bank litigation has been the question whether coverage for an action by the FDIC in its role as receiver of a failed bank against a failed bank’s directors and officers is precluded by the Insured vs. Insured exclusion … Continue Reading

Advisen Releases Private Company D&O Study

Posted in D & O Insurance
There is a great deal of information available about the liabilities of publicly traded companies, as well as about the D&O insurance implications arising from those liabilities. It can be a bit of a challenge to locate the same of information concerning private companies. For that reason, it is fortunate that Advisen and AIG have … Continue Reading

Bankers’ Professional Liability Insurance Does Not Cover Overdraft Fee Class Action Settlement

Posted in D & O Insurance
A recurring question under the management liability insurance protection that banks typically acquire is the extent of the protection afforded under their policies’ professional liability provisions. One particular question that often arises is whether the policy affords coverage for customers’ excessive overdraft fees claims.. An August 7, 2013 decision by Northern District of Georgia Judge … Continue Reading

Reps and Warranties Insurance: Why You Need It

Posted in D & O Insurance
In recent years, the uptake for M&A representations and warranties insurance has increased. Just the same, even now, the participants in the M&A transaction often do not always fully understand what they need to know about the insurance. In particular, some transaction parties don’t always appreciate why they need reps and warranties insurance protection.   … Continue Reading