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

Tag Archives: D & O Insurance

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

When the D&O Insurer Denies Coverage

Posted in D & O Insurance
A D&O insurer’s denial of coverage for a claim against corporate officials can leave the individuals in a very difficult position, as illustrated by a recent high-profile case in the U.K. According to an August 4, 2013 Financial Times article entitled “Call to Reform Directors’ Insurance as iSoft Four Left With Bill” (here), four former directors … Continue Reading

D&O Insurance: No Coverage for Attorney Fee Award to Underlying Plaintiffs if Underlying Claim Not Covered

Posted in D & O Insurance
Does a D&O insurance policy provide coverage for attorneys’ fees awarded in settlement of a breach of contract class action? That was the question before the court in an insurance coverage action brought by the Screen Actors Guild (SAG) against its D&O insurer. In a July 11, 2013 decision, Central District of California Judge Dolly … Continue Reading

Seventh Circuit: D&O Insurance Covers Multiplied Portion of Attorney Fee Award

Posted in D & O Insurance
Does the multiplied portion of an attorneys’ fee award constitute the “multiplied portion of multiplied damages” such that it is precluded from coverage under a D&O insurance policy? That was the question addressed in a July 16, 2013 decision from the Seventh Circuit. In an interesting opinion from Chief Judge Frank Easterbrook, the appellate court, … Continue Reading

Protection for Public Company Directors and Officers: Indemnification and Insurance

Posted in D & O Insurance
In an environment where public company directors and officers face increasing scrutiny and expanding liability exposures, the indemnification and insurance protections available to them are increasingly important. A July 15, 2013 memorandum from the Gibson Dunn law firm entitled “Director and Officer Indemnification and Insurance – Issues for Public Companies to Consider” (here) takes a … Continue Reading