D&O insurance

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dcctofappealsThe problems that can arise from the wording of the professional services exclusion in a service company’s D&O insurance policy are perennial issues and a recurring topic on this blog (see for example here). When the exclusion in a service company’s management liability policy is interpreted broadly the exclusion can sweep so extensively that it can preclude coverage for the very types of claims the management liability policy was intended to insure. A recent decision from the District of Columbia’s highest court highlights these concerns.

In a February 11, 2016 District of Columbia Court of Appeals decision (here), the appellate court, applying District of Columbia law, reversed a lower court ruling that the professional services exclusion in the management  liability insurance policy of defunct Carlyle Management LLC precluded coverage for the various claims that had been asserted against Carlyle, related entities, and its senior officials. The Court of Appeals did not affirmatively conclude that the underlying claims were covered; rather, it held only that the broadly worded professional liability exclusion was ambiguous, and that the question of coverage is properly a question for a factfinder. While the appellate court did not affirmatively find coverage, the court’s opinion underscores the concerns with interpreting and applying the professional liability exclusion in a service firm’s management liability insurance policy too broadly.
Continue Reading D.C. Appellate Court Reverses Ruling that Professional Services Exclusion Bars Coverage for Failed Investment Firm’s Claims

federal depositFollowing the recent bank failure wave, the FDIC filed liability actions against the former directors and offices of many of the failed banks, as detailed here. But the FDIC did not sue the former executives of every failed bank. Why did the FDIC sue the executives of some failed banks but not others? Was it because the failed banks the agency targeted had engaged in qualitatively different conduct? Or was it merely because the ones the FDIC sued had D&O insurance in force from which the agency could extract a monetary recovery?
Continue Reading Does the FDIC Target Only Failed Bank Directors and Officers That Have D&O Insurance?

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Donna Ferrara

In the following guest post, Donna Ferrara, Esq., Senior Vice-President, Managing Director, Management Liability Practice, Arthur J. Gallagher, takes a look at a recent federal appellate court decision highlighting the problems that can arise when anyone – including outside counsel – makes assumptions about insurance without actually looking at the relevant policies. Donna also examines the lessons that can be learned from this unfortunate case. My thanks to Donna for her willingness 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 Donna’s guest post.
Continue Reading Guest Post: The Danger of Unfounded Assumptions

top tenIt was an eventful year in the world of directors’ and officers’ liability in 2015. Many of the year’s key events significantly changed the D&O liability environment, while other developments during the year could alter the D&O insurance marketplace itself. Many of 2015’s developments have important implications for 2016 – and possibly for years to come. The list of the Top Ten D&O Stories of 2015 is set out below with an eye toward these future possibilities.
Continue Reading The Top Ten D&O Stories of 2015

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Joseph P. Monteleone

Among the perennial coverage issues arising under D&O and E&O policies are questions involving timely notice of claim. Recently, the notice provisions many professional liability insurance policies relating to notice timeliness have been revised to lengthen the time period within which notice must be given and even specifying that if in order to assert late notice of claim, an insurer must demonstrate that it has been prejudiced by the late provision of notice. In the following guest post, industry veteran and well-known insurer-side coverage attorney Joseph P. Monteleone of the Rivkin Radler law firm takes a look at these policy wording changes as well as the case law context within which these changes have arisen.

I would like to thank Joe for his willingness to publish his article on this blog. I welcome guest post submissions from responsible authors on topics of interest to readers of this site. Please contact me directly if you are interested in submitting a guest blog post. Here is Joe’s guest post.

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One of the hallmarks of a claims-made and reported policy historically has been the two-pronged requirement that (1) the claim against the insured must be first made during the policy period, and (2) the claim had to be reported to the insurer, if not strictly within the policy period, at least no later than a “bright line” cut-off date after policy expiration.  These cut-off dates were generally thirty (30) or sixty (60) after policy expiration.

Contrast these with so-called pure claims-made policies, which have the first of the two-pronged component discussed above, but the reporting requirement is typically “as soon as practicable”[i], similar to reporting requirements under occurrence-triggered policies such as the Commercial General Liability (CGL) policy.

As part of the inexorable trend of policy wordings becoming ever broader for the benefit of the policyholder, notwithstanding any hardening or softening of rates for the policies, we have seen significant modifications to the policy reporting provisions.

Continue Reading Guest Post: Notice-Prejudice Requirements in D&O Policies: Diverse Trends in Contract Language and Case Law

eleventh cuircuit sealIn an unpublished October 5, 2015 opinion (here), the Eleventh Circuit, applying Florida law, held that a D&O insurance policy’s contractual liability exclusion precluded coverage for negligence claims asserted against persons insured under the policy. The contract exclusion was written with a broad “based upon, arising out of” preamble wording. As discussed below, the decision highlights concerns about the use of the broad preamble in D&O insurance policies’ contractual liability exclusion. An October 28, 2015 post on the Wiley Rein law firm’s Executive Summary Blog about the Eleventh Circuit’s ruling can be found here.
Continue Reading D&O Insurance: Contractual Liability Exclusion Applied to Preclude Coverage for Negligence Claim

stanfordsealIn the world of corporate governance, there are a number of common presumptions about board structure and practices. However, according to a recent paper, many of these presumptions may in fact represent corporate governance “myths.” In their September 30, 2015 paper entitled “Seven Myths of Boards of Directors” (here) Stanford Business School Professor David Larcker and Resercher Brian Tayan examine several “commonly accepted beliefs about boards of directors that are not substantiated by empirical evidence.”
Continue Reading The “Myth” of Outside Director Liability and the Critical Importance of D&O Insurance

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Burkhard Fassbach
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Niklas Rahlmeyer

This blog’s primary focus is on developments in the directors’ and officers’ liability and insurance in the United States, but we do also try to cover important developments elsewhere. In the following guest post, Burkhard Fassbach, who is Of Counsel with the Dusseldorf based D&O-Specialist Law Firm Hendricks, and Niklas Rahlmeyer, who is an attorney in the corporate practice group of the Dusseldorf office of Field Fisher Waterhouse LLP provide their perspective on the German D&O insurance marketplace and discuss their views on the important insurance coverage issues there.

I would like to thank Burkhard and Niklas for their willingness to publish their 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 Burkhard’s and Niklas’s guest post.

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The following post sheds light on some of the latest topics of D&O insurance that keep the German market busy. It depicts the concept of manager liability and D&O insurance in Germany, reprimands the German insurers’ practice of settling claims and outlines a catalogue of important issues the policyholder and insureds should keep a wary eye on when taking out D&O insurance coverage.
Continue Reading Guest Post: Marshall Plan for D&O Policies in Germany

wywoSeptember is here. Labor Day has come and gone. That can mean only one thing – time to put away the surf boards, bungee cords, fencing foils, pogo sticks, nunchuks, hula hoops, light sabers, and unicycles, and get back to work. Yes, it is time to answer all those emails and return all of those phone messages. And most important of all, it is time to catch up on what has been happening in the world of directors’ and officers’ liability and insurance. Here is what happened while you were out.
Continue Reading While You Were Out

ninth circuitThe problems that can arise from the wording of the professional services exclusion in the D&O insurance policy of a service company are perennial issues and a recurring topic on this blog (see most recently here). In an unpublished August 18, 2015 opinion (here), the Ninth Circuit affirmed the district court’s conclusion that coverage for a claim under a payroll services firm’s management liability insurance policy was precluded by the policy’s professional services exclusion. While the preclusion of coverage under the professional services exclusion in services firms’  D&O policies often can be questionable, this instance seems like a situation where the exclusion was applicable. As discussed below, however, there are still some important lessons from this case.
Continue Reading Ninth Circuit: Professional Services Exclusion Precludes Coverage Under Payroll Services Firm’s Management Liability Insurance Policy