In the latest installment in its D&O Insurance videos series, London-based insurer RisingEdge, in a panel discussion of D&O insurance experts, examines the five steps in the D&O insurance policy placement, implementation, and deployment process. The panel, which is moderated by RisingEdge CEO Philippe Gouraud, includes Lianne Gras of Howden; Robert Barnes of GAWS in
Public company D&O insurance policies provide entity coverage (that is, insurance for the benefit of the insured organization) only for “Securities Claims.” But what is a “Securities Claim”? That is the question that Delaware’s courts have grappled with in a long-running dispute between the telecommunications company Verizon and its insurers.
The Delaware Superior Court had
Private company management liability insurance policies typically contain certain policy exclusions, including, for example, the Insured v. Insured Exclusion and the Contractual Liability Exclusion. These exclusions often include carve-backs preserving coverage for otherwise excluded claims. While the exclusions and even the carve-backs may be familiar, the way they operate in practice may not be as familiar, particularly the carve-backs. In a recent insurance coverage decision from the District of Massachusetts, applying Massachusetts law, the court considered how common coverage carve-backs operate and interact. Readers may find the way the carve-backs did or did not apply to provide some interesting lessons. A copy of the Court’s November 9, 2023, opinion can be found here.
Continue Reading Carve Backs Preserve Coverage for Otherwise Excluded Claims
The drama surrounding former crypto mogul Samuel Bankman-Fried’s criminal prosecution and conviction has dominated the business pages for weeks. In addition, and as the news reports noted at the time, just before the criminal trial began, SBF sued one of FTX’s excess D&O insurers, alleging the insurer was refusing to pay his legal bills. Earlier this week, it emerged that SBF has withdrawn his insurance coverage lawsuit. But while the coverage lawsuit apparently now will not go forward, the interesting questions the situation presented are still worth asking. And the short-lived coverage litigation also unearthed some interesting stuff, as discussed below. Daphne Zhang’s November 7, 2023, Bloomberg article about the coverage litigation, which contains a comprehensive overview of the coverage dispute, can be found here.
Continue Reading FTX Legal Drama Includes D&O Coverage Fight (Now Withdrawn, but Not Forgotten)
One of the continuing issues in the world of directors’ and officers’ liability insurance in recent years has been the question of when a U.S. company should obtain a separate locally admitted D&O insurance policy for its foreign subsidiaries. In the following guest post, Jane Njavro, Senior Vice President and Partner at Woodruff Sawyer, examines the issues surrounding this perennial question. This article was originally published on Woodruff Sawyer’s D&O Notebook, here. I would like to thank Jane for allowing me to publish her 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 Jane’s article.
Continue Reading Guest Post: Foreign Subsidiaries and D&O Insurance: Are You Prepared to Place?Some D&O insurance policy exclusions are written with the broad “based upon, arising out of, in any way relating to” preamble. These exclusions sweep broadly, precluding coverage for a wide range of claims. The ever-present question when insurers seek to rely on these exclusions’ sweeping reach is: how broad of a reach it too broad? What is the outer limit of these exclusions’ preclusive effect?
In a decision that is worth reading closely, the Delaware Supreme Court recently concluded that, despite its broad preamble, a management liability insurance policy’s professional services exclusion did not apply to preclude coverage for the underlying claim. The decision not only explores important questions about the reach of exclusions with the broad preamble, but it also underscores the deeper question about the use of the broad preamble for these types of exclusions in the first place. The Delaware Supreme Court’s September 14, 2023, opinion in the case can be found here.
Continue Reading The “Broad Preamble” Problem in D&O Insurance Exclusions
In the wake of the 2019 merger of Viacom and CBS that formed ViacomCBS (later renamed Paramount Global), former shareholders of both CBS and Viacom filed separate D&O liability lawsuits. As discussed here, the CBS shareholders’ lawsuit settled $165.5 million. The separate Viacom shareholders’ lawsuit settled for $122.5 million, and now the battle has shifted to insurance coverage litigation in which the Viacom’s excess insurers contend that coverage for the settlement is precluded by the primary policy’s Bump-Up Provision.
In an interesting August 10, 2023, opinion, Delaware Superior Court Judge Sheldon K. Rennie, applying Delaware law, granted Viacom’s motion for partial summary judgment, holding that the Bump-Up Provision does not preclude coverage for the settlement. As discussed below, Judge Rennie’s holding turned on the nature of the transaction in which Viacom and CBS merged, and, even more significantly, on the contrast between the wording of the Bump-Up Provision, on the one hand, and other policy provisions dealing with merger situations, on the other hand. A copy of Judge Rennie’s opinion can be found here.
Continue Reading Bump-Up Provision Does Not Bar Viacom Shareholders’ Suit Settlement Coverage
Many of us have personal checklists that we use when we review D&O insurance policies. In the following guest post, Umesh Pratapa, an independent insurance consultant based in India, shares his checklist of items to look for in D&O insurance policies. Because Umesh works in the Indian insurance market, some of the items may be less relevant in other markets. I appreciate Umesh’s willingness to share his checklist with the readers of this site. By publishing Umesh’s checklist, I hope to encourage others also to share their checklists to post on this site for other readers to benefit from. Umesh published a prior version of this article on his website, here. I would like to thank Umesh for allowing me to publish his article on this site. Here is Umesh’s article.
Continue Reading Guest Post: D&O Liability Insurance Policy – Assumed Vs. Available Coverage
Many management liability exclusions contain contractual liability exclusions to clarify that the policy doesn’t provide coverage for contractual breach claims. However, as I have pointed out in prior posts, insurers, in reliance on the exclusion’s broad wording, often seek to apply these exclusions broadly, to apply to a wide variety of kinds of claims beyond contractual liability disputes. In a recent Fifth Circuit decision, the appellate court rejected an insurer’s attempt to apply a contractual liability exclusion to preclude coverage for an underlying breach of fiduciary duty claim. The reasoning of the Fifth Circuit in rejecting the insurer’s arguments provide policyholders with common sense reasoning on which to rely in seeking to avoid the application of the exclusion to noncontractual claims.
Continue Reading Contractual Liability Exclusion Does Not Bar Coverage for Fiduciary Duty Claim
A host of economic factors — including most significantly the Fed’s interest rate increases (as part of The Fed’s overall money tightening policy sometimes referred to as Quantitative Tightening (QT)) – are putting pressure on companies, and the pressure is translating into increasing bankruptcy filings. In the following guest post, Sarah Abrams, Head of Professional Liability Claims at Bowhead Specialty, takes a look at these developments and considers the D&O insurance implications. I would like to thank Sarah for allowing me to publish her article as a guest post on my 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 Sarah’s article.
Continue Reading Guest Post: Is QT making D&O Policies a Liquid Asset?