D & O Insurance

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Federal Reserve Building, Washington, D.C.

The Federal Reserve wants bank directors and senior executives  to know that while their D&O insurance policies are “an important risk mitigation tool,” their policies could contain exclusions that could “potentially limit coverage” and leave them without insurance in the event of a claim. In a July 23, 2019 letter (here), the Fed informed banks and other financial institutions of the risks associated with exclusionary provisions in D&O insurance policies and urged board members and senior executives to “understand fully the protections and limitations” that the D&O insurance policies provide. As discussed below, the Fed’s guidance is good advice for directors and senior executives of any organization, not just for banks. An August 3, 2019 post on the Willis Towers Watson blog about the Fed letter can be found here.
Continue Reading The Fed Has a Message for Banks about D&O Insurance          

As the number of shareholder appraisal lawsuits increased a few years ago, a recurring question has been whether or not a company’s D&O insurance covers the company’s costs incurred in defending an appraisal action. In a recent decision, a Delaware Superior Court judge rejected a number of the recurring coverage defenses on which insurers rely in disputing coverage for appraisal action costs and expenses. The Court’s opinion in the Solera Holdings case contains several very interesting rulings, some of which could be relevant even outside of the appraisal action context. A copy of the Delaware Superior Court’s July 31, 2019 opinion can be found here.
Continue Reading D&O Insurance: Del. Court Rejects Insurers’ Appraisal Action Coverage Defenses

In a recent decision, the Delaware Superior Court, applying Delaware law, held that two of Pfizer’s excess D&O insurers are on the hook for their portion of costs the company incurred in defending and settling a securities class action lawsuit, despite the excess insurers’ arguments that the claim was interrelated with an earlier securities suit and that coverage was therefore precluded under their policies’ Specific Litigation Exclusion. The critical determinant in the court’s ruling may have been its decision that Delaware law governed the coverage dispute, but there are still a number of interesting elements about issue of claims relatedness. The Delaware Superior Court’s July 23, 2019 decision can be found here.
Continue Reading D&O Insurance: Specific Litigation Exclusion Does Not Preclude Coverage for Subsequent Securities Suit

Let’s say your client has been served with a new D&O lawsuit. Based on what you know about the events that led up to the lawsuit, you are genuinely unsure whether the claim was first made earlier, or not until the lawsuit was filed. Just to complicate things further, during the last renewal cycle, the client moved its D&O coverage from one carrier to another carrier, and some of the events in the lawsuit lead-up occurred during the prior policy period. Just notice both carriers, right? That would seem to be the prudent thing to do, especially given the uncertainty about the claims made date, right?

Maybe not.
Continue Reading D&O Insurance: Problems with the Prior Notice Exclusion

Paul Ferrillo

In the following guest post, Paul Ferrillo takes a look at the current state of the D&O insurance market and provides his views on the importance of a healthy D&O market for corporate America. Paul is a shareholder in the Greenberg Traurig law firm’s Cybersecurity, Privacy, and Crisis Management Practice. I would like to thank Paul for his willingness to allow me to publish his article on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Paul’s article.
Continue Reading Why Corporate America Needs a Strong D&O Insurance Market

John F. McCarrick

In a recent post, I expressed a variety of opinions about claims notice issues arising in connection with D&O insurance renewals. Apparently, my commentary and proposals triggered enough of a reaction from my good friend John McCarrick that he felt compelled to write a response. John is a partner at the White & Williams law firm and chair of the firm’s Financial Lines Group. John is also one of the most widely respected professionals in the D&O insurance industry, and so I am pleased he took the time to write a response to my article and pleased to publish his response here. Here is John’s response.
Continue Reading Guest Post: Some Additional Thoughts on Easing Late Notice Consequences under Renewal Policies

In a noteworthy decision that raises a number of interesting issues, District of Minnesota Judge Ann D. Montgomery, applying Minnesota law, held that a company’s excess D&O insurance policy’s prior acts exclusion precludes coverage for the entirety of claims asserted against the company, even with respect to wrongful acts alleged to have taken place after the prior acts date. This case involves a number of twists and turns, while raising some important questions. Judge Montgomery’s June 4, 2019 opinion in the case can be found here. The Wiley Rein law firm’s June 20, 2019 post about the ruling on its Executive Summary Blog can be found here.
Continue Reading D&O Insurance: Prior Acts Exclusion Precludes Coverage for Post-Past Acts Date Conduct

As the number of Telephone Consumer Protection Act (TCPA) class actions has risen in recent years, one recurring question has been whether or not there is coverage under the defendant companies’ D&O insurance policies for these claims.  The specific issue is whether or not D&O policy’s “invasion of privacy” exclusion precludes coverage for TCPA claims. In the latest ruling to address these issues, Southern District of Florida Judge Robin L. Rosenberg, applying Florida law, held that, in light of the specific allegations in the underlying TCPA action, coverage for the claim was precluded by the exclusion. Judge Rosenberg’s ruling is consistent with other rulings, but does also raise some interesting issues. Judge Rosenberg’s May 30, 2019 order can be found here. A June 7, 2019 post on the Wiley Rein law firm’s Executive Summary Blog can be found here.
Continue Reading D&O Insurance: Thinking About the Invasion of Privacy Exclusion

In an interesting opinion, the Fifth Circuit has set aside a settlement and related bar order that had been approved by the district court in litigation arising out of the Stanford Financial Ponzi scheme scandal. The appellate court said that the district court lacked authority to approve the settlement in light of several of its features, including its provisions cutting off the claims of several former Stanford Financial employees and managers to the defunct firm’s insurance policies’ proceeds. As discussed below, the circumstances surrounding the settlement raise serious questions about the intended purpose of D&O insurance. The Fifth Circuit’s June 17, 2019 opinion in the case can be found here.
Continue Reading Who is D&O Insurance For?

As anyone involved in the world of D&O insurance knows, a frequently recurring coverage issue is the question of whether or not the insured has provided timely notice of claim as required by the policy. These kinds of  disputes takes a variety of forms, but one particular recurring variation involves the question whether or not the policyholder has satisfied the policy’s notice requirements when a claim is made against the policyholder during the policy period of one policy but the policyholder does not provide notice until the policy period of a subsequent renewal policy. That was the issue in a case recently decided by the Sixth Circuit Court of Appeals, in which the appellate court affirmed the district court’s holding that the policyholder’s provision of notice during the renewal policy of a claim made during a prior policy period did not satisfy the applicable notice requirements. Because this is a recurring claims issue, I have some thoughts and suggestions about this situation, below. The Sixth Circuit’s May 31, 2019 opinion in the case can be found here.
Continue Reading D&O Insurance: Continuity of Coverage as a Counter to Late Notice