In a decision that gives broad effect to a D&O insurance policy’s contractual liability exclusion, on August 17, 2012, Middle District of Pennsylvania Judge William Nealon granted the insurer’s motion for summary judgment, holding under Pennsylvania law that the insurer had no obligation to defend or indemnify the policyholder in the underlying action. A copy
Fidelity Insurance and the Timing of the Employer’s Responsibility for an Employee Defalcation
On August 1, 2011, in a 2-1 decision characterized by a testy but interesting exchange between the majority and the dissent, the Sixth Circuit held that a fidelity policy provided coverage for nearly one million dollars a bank employee stole from client brokerage accounts. For those who (like me) are not regularly involved in fidelity
D&O Insurance: Applying the Insured vs. Insured Exclusion When Plaintiffs Include Both Insured Persons and Non-Insureds
In a June 29, 2012 opinion (here), the Seventh Circuit, applying Illinois law, held that when the defendants in a lawsuit include both persons who are insureds under the defendant company’s D&O policy and persons are not insureds, the policy’s Insured vs. Insured exclusion does not preclude coverage for the entire lawsuit, but only
D&O Insurance: Subsequent IndyMac Bank Claims Interrelated with Prior Suit, Precluding Coverage for Later Claims under Second Insurance Program
One of the perennial D&O insurance coverage questions is whether or not subsequent claims are “interrelated” with a prior claim and therefore deemed first made at the time of the prior claim. This question can be particularly critical when the subsequent claims arose during a successor policy period; the answer to the “interrelatedness” question can
Interview with Professional Liability Insurance Industry Leader David Bell
Along with everyone else in the professional liability insurance industry , I was fascinated by the news that my good friend David Bell, with whom I served on the Professional Liability Underwriting Society (PLUS) Board of Trustees, was leaving Bernuda and his position at Allied World Assurance Company Holdings, to return to Montana, where he would
NY Appellate Court: Excess Insurers Off the Hook Where It Can’t Be Determined if Underlying Insurance Exhausted
In the latest of what is now a lengthening line of cases, on June 12, 2012, the New York Supreme Court, Appellate Division, First Department, applying Illinois law, ruled in a coverage case brought by JPMorgan Chase that owing to settlements by underlying carriers in a professional liability insurance program, excess insurers in the program
Management Liability Insurer Must Defend Insured Accused of Sexual Molestation
The criminal trial in which Jerry Sandusky, the former defensive coordinator of Penn State’s football team, stands accused of sexually abusing at least 10 boys over a 15-year period began Tuesday, June 4, 2012, in Bellefonte, Pa. Sandusky has been charged with forty criminal counts. Sandusky has also separately named as a defendant in a
Rep. Frank Introduces Bill to Prohibit Insurance for Compensation Clawbacks and Civil Money Penalties
On May 30, 2012, Representative Barney Frank introduced a bill entitled the “Executive Compensation Clawback Full Enforcement Act” (here) that by its own terms is designed to “prohibit individuals from insurance against possible losses from having to repay illegally-received compensation or from having to repay civil penalties.” The proposed Act’s appears primarily addressed
D&O Insurance: Officer Not Acting in Insured Capacity When Guaranteeing Company Debt
A company’s D&O insurance policy provides liability protection for the company’s individual directors and officers, but only for their actions undertaken in their capacities as directors and officers. It does not protect them when they are acting in a personal capacity. So, when a company’s CEO signs a loan guaranty for the company, is he
D&O Insurance: Layers and Tiers and Problems
One of the critical issues in putting together a D&O insurance program is the question of how to structure the insurance. Among the more complex issues is how to divide the program between “traditional” D&O insurance coverage and Excess Side A DIC insurance (which in effect provides catastrophic protection for individual directors and officers in