CAC Specialty's D&O Claims Update
On Tuesday, April 14, 2020, CAC Specialty hosted a D&O Claims Update with four senior claims professionals in the industry. We were thrilled to have the following participants on our panel:
Jennifer Jacobson—C N A
Michelle Klein—Berkley Professional
Benjamin Minard—AXA XL
Todd Greeley—Berkshire Hathaway Specialty
Here are some key takeaways from the panel’s discussion:
Things were not rosy before the pandemic hit:
The panelists revisited the highlights from the late February PLUS conference in NYC including:
the continued surge in securities class actions; and
the surge in high-dollar derivative settlements (e.g. Wells Fargo, McKesson).
Defense costs continue to rise.
The Salzberg v. Sciabacucchi case was a small bright light, but the ramifications of the case are far from clear from both a legal perspective and a market perspective (lack of IPOs).
What does the pandemic mean for D&O claims?
Insurers agree that the wave of public company COVID-19 related financial disclosures will be fodder for potential securities class actions later this year and into 2021.
The SEC will be all over the issuers’ disclosures and their pandemic-related follow-through.
Due to the sharp economic downturn and the tangential drop in the price of oil, corporate bankruptcies are expected to pile up. Side A D&O insurance is typically the last line of defense and indemnity for directors and officers in the event of bankruptcy. As a result, careful consideration should be had when renewing D&O policies and considering appropriate Side A limits of insurance.
How is working remotely impacting the claims management/resolution?
The transition to working from home has not materially impacted the management liability claims process.
Remote mediations are the norm, but can be difficult in the bigger cases with large (or even multiple) towers at play.
The lack of personal interaction is missed, and there is a worry that perhaps some ideas and agreements may get lost in “Zoom world” translation.
Traps for the unwary insured?
Notices of circumstances that could give rise to a claim are a double-edged sword. In order to make a notice of circumstances “stick” to a policy period, make sure to work closely with your broker, outside counsel and the insurer to perfect the notice per the terms and conditions of the policy. If the requisite specificity is not provided to the insurer, future claims can be denied.
Insurers continue to focus on cooperation and transparency as the keys to successful claims resolution. Especially in these work-from-home times, it is important for insureds to coordinate early and often with insurers. Surprises at the 11th hour are not helpful!
Read your policy. Make sure you understand notice and consent requirements and that you abide by them.
If you would like to view the webinar recording in its entirety, please contact your CAC Specialty representative.