Last fall, the New York Department of Insurance ignited a firestorm when it issued an opinion that a D&O insurance policy may not place the duty to defend on the insured. As I discussed in an earlier post (here), the opinion is contrary to both the uniform practice of the D&O insurance industry and the unambiguous preference of public company D&O insurance buyers.
On February 26, 2009, following his keynote address at the the Professional Liability Underwriting Society (PLUS) D&O Symposium, New York Insurance Superintendent Eric Dinallo acknowledged the industry’s reaction to his department’s opinion, and indicated that the department would reconsider the issue and address it through the issuance of a new regulation. He also invited the industry to help his department to shape the new regulation.
Based on the Superintendent’s invitation, PLUS is now working with the American Insurance Association (AIA). The AIA has drafted proposed revised regulatory language that is now being circulated among its members. PLUS has also invited its member companies to comment on the draft regulatory proposal. PLUS will compile the comments and share them with the AIA and the New York Department of Insurance.
One representative from each PLUS member company can obtain a copy of the draft proposed regulatory language by contacting PLUS’s Executive Director, Derek Hazletine, firstname.lastname@example.org.
I am setting all of this information out in a separate blog post because the deadline for comment to be received is next Monday, March 23, 2009, so companies that want to participate will have to move quickly.
In his Feb. 26 presentation, Dinallo indicated that he intends to act quickly on the proposed regulations and that he hopes to have the regulations in place by late spring.
Insurers Must Disclose Climate Change Exposures: On March 17, 2009, the National Association of Insurance Commissioners adoped a "mandatory requirement that insurance companies disclose to regulators the financial risks they face from climate change, as well as the actions the companies are taking to respond to those risks." According to the NAIC’s press release (here), all insurance companies with annual premiums of $500 million or more will be required to complete an annual Insurer Climate Risk Disclosure Survey with an initial deadline of May 1, 2010.
In the Survey, insurers will be required to report on "how they are altering their risk-management and catastrophe risk moedline in light of the challenges posed by climate change" and they will also be required to report on "steps they are taking to engage and education policymakers and policyholders on the risks of climate change" as well as "whether and how they are changing their investment strategies."
These reporting requirements could have a singificant impact, not just on insurers disclosures, but on their conduct as well. The requirement to disclose what the carriers are doing to "engage and educate" policymakers seems to suggest that the NAIC expects carriers to become proactive on the legislative and regulatory front regarding climate change. The disclosure regarding investment strategies potentially could influence insurers” investment decisions. The clear implication of the NAIC’s rule is that the regulators expect the disclosure requirements will motivate the carriers to become proactive in these areas.
The web page for the NAIC’s Climate Change and Global Warming Task Force, including a link to the draft language of the new disclosure requirements, can be found here.
The Hits Just Keep on Coming: Bernard Madoff may now be in jail following his recent guilty plea, but that does not seem to have slowed the flow of new Madoff-related lawsuits. As the new suits have come in, I have added the new suits to my running tally of the Madoff-related litigation, which can be accessed here.
The litigation register has now grown to be quite lengthy. Madoff’s fraudulent scheme may have cost investors billions, but he has stimulated a heaping stack of litigation.Special thanks to the many readers who have been sending me the new complaints as they have come in, especially Jon Jacobson of the Greenberg Traurig law firm. Readers may be interested to know that Jon is also reporting on the new cases on Twitter (here) as they come in.
Speaker’s Corner: Next week I will be in London speaking at the C5 D&O Liability Insurance Conference. The specific panel on which I will be speaking is entitled "Current Litigation Trends in Europe and the U.S.: Are Class Actions on the Horizon?" The conference, which will take place March 24 and 25, 2009 at the Grange City Hotel., will feature a diverse array of speakers on a wide variety of D&O insurance related topics. The entire program agenda can be found here.