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Sometimes seemingly subtle policy wording differences can significantly affect the court’s analysis of key policy clauses. The significance of the wording subtleties sometimes is best seen by comparing the wording to equivalent provisions in different policies. That was the case in recent proceedings in which an excess insurer sought to compel arbitration of an underlying coverage dispute. As discussed below, the court found that the language of the specific arbitration provision in dispute did not apply either to the parties or the dispute involved in the underlying coverage lawsuit. The ruling, in which the court applied New York law, can be found here.Continue Reading Insurer Cannot Compel Arbitration in Reliance on Narrow Arb Clause Wording

Daniele Favalli
Alessio Zolpi

In the following guest post, Daniele Favalli and Alessio Zolpi take a look at the availability of D&O insurance in connection with criminal proceedings in Switzerland. Daniele is an attorney admitted to the Zurich bar. He is a partner and co-head of the Dispute Resolution Team of the Zurich-based law firm VISCHER. Alessio is an attorney admitted to the Zurich bar and an associate in the Dispute Resolution Team at VISCHER. I would like to thank Daniele and Alessio 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 Daniele and Alessio’s article.Continue Reading Guest Post: Switzerland: D&O Coverage Following Criminal Investigations

Readers may have seen the news this past week that WTW has filed an appeal to the Fourth Circuit of the district court’s holding that the bump-up exclusion in its D&O insurance policy precludes coverage for the settlement of the post-closing lawsuit filed  the company’s merger with Towers Watson. This appeal is in fact the second time this coverage lawsuit has made its way to the Fourth Circuit. This appeal will be closely watched not only because of the parties involved, but also because, as discussed in a recent memo from the Cooley law firm, issues surrounding the bump-up exclusion increasingly have been the source of litigated coverage disputes, and indeed questions concerning the exclusion are increasingly common. For reasons discussed below, I think there are important issues about this exclusion that the D&O insurance industry should be discussing.Continue Reading The Bump-Up Exclusion and Coverage for Post-Close M&A Lawsuits

D&O insurance provides coverage for individuals to the extent they are acting in their capacities as directors and officers of their companies. The policies do not provide coverage when the individuals are acting in other capacities. A recent decision from a New Jersey appellate court highlights the coverage questions that can arise when individuals are alleged to be acting in multiple capacities. The court concluded that coverage was entirely precluded for an individual who was acting multiple capacities. As discussed below, the decision raises interesting questions. Continue Reading D&O Insurance Coverage Precluded for Individual Acting in Dual Capacities

In a recent decision, an intermediate California appellate court affirmed a trial court’s holding that the professional services exclusion in a healthcare records software provider’s D&O insurance policy precludes coverage for the company’s $118.6 million settlement with the U.S. Department of Justice (DOJ) of kickback payment allegations. As discussed below, the appellate court’s decision raises questions about the appropriate wording for professional services exclusions in D&O insurance policies. A copy of the court’s June 21, 2024, opinion can be found here. Geoffrey Fehling’s July 2, 2024, post in the Hunton Andrews Kurth law firm’s Legal Updates blog about the court’s decision can be found here.Continue Reading Professional Services Exclusion Bars D&O Coverage for $118 Million DOJ Settlement

In a recent decision in an insurance coverage dispute, the Delaware Superior Court granted the insurers’ motions to dismiss, holding that coverage under two towers of insurance was precluded, respectively, by the No Action clause and the Past Acts Exclusion. Insurance coverage practitioners and observers will find this decision interesting in and of itself, for what it says about the relevant policy provisions, and as a general matter, as an example of a Delaware court coverage decision. As discussed below, the decision arguably is an expectations-defying example of an insurer-friendly Delaware court coverage decision. A copy of the court’s May 9, 2024 decision opinion can be found here.Continue Reading Del. Court Dismisses Coverage Suit Based on No Action, Prior Acts Clauses

Chicago

The D&O Diary was in Chicago for a brief visit this past week. Chicago is a great place to visit anytime of the year, but the month of May might be just about the optimal time to visit. On the day of my arrival at least, the weather was just about perfect. The purpose of my visit to Chicago was to attend the 2024 Annual Meeting of the American College of Coverage Counsel. Continue Reading Chicago

The IPO market has been in the doldrums since 2021, but there are promising signs that IPO activity could be on the rebound in 2024. Given the potential for the return of significant IPO activity, it is worth noting that IPO transactions entail certain risks, including in particular for the IPO companies’ private equity backers, as discussed in the following guest post written by Michelle Grimaldi, Assistant Vice President, Claims, Fair American Insurance and Reinsurance Company; Elan Kandel, Member, Bailey Cavalieri LLC; and James Talbert, Associate, 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 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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Financially distressed companies often can only obtain D&O insurance coverage on a policy with a bankruptcy or insolvency exclusion precluding coverage for bankruptcy-related claims. The enforcement of these exclusions in the wake of a subsequent bankruptcy can produce harsh results, and insureds often argue that the exclusion does not apply or even that the exclusion…

On March 6, 2024, in a decision that has attracted a lot of attention in the business press, the Eastern District of Virginia, applying Virginia law, held that the bump-up exclusion in Towers Watson’s D&O insurance policy precludes coverage for the $90 million paid in settlement of claims relating to the firm’s January 2016 merger with Willis Group Holdings. As discussed below, the court’s ruling highlights recurring issues concerning the wording of the bump-up exclusion. A copy of the March 6, 2024, opinion can be found here.Continue Reading Bump-Up Exclusion Precludes Coverage for Merger-Related Claims Settlement