Yet another Delaware court has issued a noteworthy management liability insurance coverage opinion. In a detailed September 12, 2022 opinion in a dispute between Godiva Chocolatier and its management liability insurers over coverage for underlying consumer protection claims against the company, Delaware Superior Court Judge Mary M. Johnston rejected many – but not all — of the insurers’ coverage defenses. A copy of Judge Johnston’s opinion can be found here.
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Del. Court Holds Warranty Letter Non-Disclosure of SEC Inquiry Precludes Coverage for Subsequent Claims
When a management liability insurance policyholder seeks to increase the limits of liability of their insurance program, the insurers will typically require a statement warranting that the policyholder is not aware of any facts or circumstances that could give rise to a claim. This warranty statement typically specifies that if there is a subsequent claim based on facts or circumstances of which the applicant has knowledge, the subsequent claim is precluded from coverage. This warranty exclusion is often referred to as the prior knowledge exclusion. In an interesting August 15, 2022 opinion in an insurance coverage dispute, Delaware Superior Court Judge Eric Davis held that as a result of the insured’s failure to disclose a pending SEC inquiry in a warranty letter, the prior knowledge exclusion in the letter precluded coverage for the underlying matters.
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Thinking About Follow-Form Excess Insurance
Many D&O insurance programs consist of multiple layers of insurance arranged with a layer of primary insurance and one or more layers of excess insurance. In order to ensure that the insurance in the program operates consistently and uniformly, the excess insurance is usually written on a so-called “follow form” basis, meaning that the excess insurance incorporates the primary’s policy’s terms and conditions, subject to any express provisions in the excess policy to the contrary. A recent case from the Court of Appeal for Ontario considered the meaning and impact of excess follow form coverage in the context of a dispute over whether a policyholder could exercise an option to purchase extended reported period coverage from its excess insurer. The decision, while arguable unremarkable in and of itself, nevertheless may have some important lessons for excess insurers. A copy of the Ontario Appeal Court’s July 13, 2022 decision can be found here.
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Del. Federal Court Rules in Insurer’s Favor in D&O Insurance Coverage Dispute
A perception has emerged in certain circles that Delaware Superior Court is a favorable forum for D&O insurance policyholder and unfavorable for D&O insurers. However, in a recent decision in a D&O insurance coverage dispute by the federal court in Delaware (as opposed to the state court in Delaware) not only determined that Delaware law applied but also determined that there was no coverage under the applicable policy for the underlying claim. As discussed below, the court’s ruling in the case may suggest that Delaware’s federal court may represent an alternative to Delaware’s state courts for D&O insurers. A copy of the District of Delaware’s May 23, 2022 decision in the Cocrystal case can be found here.
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Guest Post: Would the Board of P&O Ferries be Covered under a D&O Policy?
For those of you who may not be following the unfolding news in the U.K. involving P&O Ferries and its firing of 800 of its sailors, it is quite a story. (Background here.) In the following guest post, Francis Kean considers the D&O insurance issues that the P&O Ferries situation could present. Francis is a Partner in the Financial Lines team at McGill and Partners. This article was previously published as a post on the Airmic website. I would like to thank Francis for allowing me to publish his article as a guest post 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 Francis’s article.
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Guest Post: Must Claims be “Fundamentally Identical” to be “Related”? The Delaware Supreme Court Weighs In
On March 16, 2022, the Delaware Supreme Court issued an important decision on the “relatedness” issue in the First Solar case, as I discussed in a prior post on this site, here. In the following guest post, Bryan W. Petrilla, Esq., a partner in the Stewart Smith law firm in Philadelphia, takes a look at the First Solar decision and considers its implication. I would like to thank Bryan for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Here is Bryan’s article.
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Guest Post: Professional Services: Where Do You Draw the Line?
In the following guest post, the guest authors examine issues relating to the Professional Services Exclusion found in many private company D&O insurance policies. This article was co-authored by Matthew Schweiger, AVP Claims, D&O Management Professional Liability, Core Specialty, Jerry Grenon, AVP, Management and Professional Liability, Core Specialty, Elan Kandel, Member, Bailey Cavalieri LLC and James Young, Of Counsel, Bailey Cavalieri LLC. I would like to thank the authors for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.
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Guest Post: Boardroom Guide to D&O Insurance
On this site, I try to keep my readers up to date on the latest developments in the world of directors’ and officers’ liability and insurance. Every now and then, it is worth taking a step back and asking the basic questions, such as, what should directors know about their D&O insurance? The following guest post, written by Francis Kean and Noona Barlow, Partners in the Financial Lines team at McGill and Partners, in conjunction with Airmic, answer some of the basic questions. This Guide was originally published by Airmic to coincide with its 2021 annual conference and is available on its website. The article’s authors are based in the UK and so the article is written from a UK perspective, but many of the article’s insights are largely applicable in the US as well. I would like to thank the authors and Airmic for allowing me to publish this article as a guest post 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 the authors’ article.
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Guest Post: Proceed with Caution: Concerns About Delaware’s New Captive Statute
As I noted in a prior post (here), Delaware’s legislature recently enacted a new legislation to permit Delaware corporations to put captive insurance in place as an alternative to traditional D&O insurance. In the following guest post, Richard Porter, Head of Financial Lines, Chubb Bermuda, Jarrod Schlesinger, Head of Public Company Management Liability, Chubb N.A. Financial Lines, and Dan Bailey, Member of Bailey Cavalieri LLC, take a look at the Delaware captive legislation and raise a number of concerns about the new law. A version of this article was previously published by Chubb on its website and can be accessed here. I would like to thank the authors for allowing me to publish their article as a guest post 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 the authors’ article.
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Delaware Legislature Passes Bill Allowing Use of Captives for D&O Insurance
In a development that has set the D&O insurance industry commentariat abuzz, on January 27, 2022, the Delaware General Assembly passed Senate Bill No. 203, which amends the Delaware General Corporation Law (DGCL) to permit Delaware corporations to put captive insurance in place as an alternative to traditional D&O insurance. The legislation awaits the signature of Delaware Governor John Carney, who reportedly has already said he will sign it. As discussed below, the legislation has several interesting features, but the more interesting question is what the practical impact of the legislation will be.
Continue Reading Delaware Legislature Passes Bill Allowing Use of Captives for D&O Insurance