Looking for some good news...
It is 2021, and we are off to an interesting start. I’m going to leave it at that, and not focus on the negative. I’m looking for some good news. And I found a piece of it!
Securities Class Action Filings Decrease
Securities class action filings were down year over year. According to the Stanford Class Action Clearinghouse, 324 SCAs were filed in 2020 as compared to 402 filings in 2019. I know what you’re thinking. In your mind, you’re formulating every argument possible as to why this isn’t good news really. And to your credit, there ARE reasons why these numbers are not the holy grail that we want them to represent. But, they are still down, and THAT is a good news.
As most readers know, the Directors and Officers Liability insurance space is in a hard market. In general, premiums and retentions are up, and insurers are pulling back on deployment of capacity. The hard market is a result of years of D&O losses exceeding underwriting profits. The main indicator of D&O market difficulties is the frequency of securities class actions filed in a given year. Collectively, we have experienced 3 years of 400+ SCA filings. Ergo, a precipitous drop like we witnessed in 2020 is a little bit of good news.
Commentators have noted a number of reasons for the drop. The most obvious, of course, is that for 9 of the 12 months of 2020, we were experiencing a global pandemic. Additionally, and probably in many ways as a result of the COVID-related economic slow-down, there was a decline in the number of Section 14(a) (federal “bump-up” claims) filed.
It is too early to tell if the 20% drop in SCAs will have any impact on D&O insurance pricing. Commentators are quick to point out that despite the drop, the 324 cases is still above the historical average. Additionally, our discussions with insurers indicate that they anticipate increases in premiums to continue although perhaps (fingers crossed?) at a slower pace.
This blog post has been rattling in my head since New Year’s Day. That is a lot of rattling. As soon as I would get settled on what to write, something else “big” happened. Think about everything that has happened since January 1. And most of the “news” has been “bad news”. How can over 4000 Americans die a day from COVID? How can 1 resident in the Los Angeles area die every 6 minutes? How can our US Capitol be infiltrated as it was on January 6th? And, if you’re anything like me, how can we be almost “numb” to all of this news?
But as the rattling in my head has continued, so has one overarching positive thought. We, my friends, are a resilient lot. We are here. In spite of ALL OF IT. And there is a lot of it. So much has happened since March, 2020. And, if you’re reading this, YOU HAVE MADE IT. If a year ago today someone had told me what was coming, I would have said “Nope. I’m out. I can’t witness what you are telling me is getting ready to happen. Nor can I walk through it. It is all just too much.” And yet, here I am. Here YOU are.
There has been, and continues to be, a ton of pain. A ton of it. And it is personal and collective at once. But we are here, and we are moving forward. I’ve been trying to focus more on the glimmers of hope that I’ve seen. These don’t solve all, or even a tiny bit, of the pain we are experiencing, but I’m hanging on to these five and others a little more each day.
We have not one, but two, effective vaccines that are being administered to the public, with others coming soon. I was walking my dog this morning and a neighbor asked me if I had gotten my first dose of the vaccine. (I must look like a senior citizen that early in the morning??) I told her I hadn’t, and asked if she had. She smiled with her mask on…you know how you can tell when someone is smiling with their mask on because their cheeks move upward? (that is a new skill we have!)…and said “I sure have”, and we practically high-fived each other from a distance. Good news.
We have had, and continue to have, TIME with our families. Some may say too much time! But TIME, nonetheless. My oldest daughter is applying to college right now, and will be flying the nest this coming fall. I feel unbelievably blessed to have had the extra time with her during her junior and senior years of high school that I wouldn’t have had otherwise. Good news.
We are breaking the mold on old traditions and exploring new ones. Although there are many examples of this, I am thinking primarily about the holidays. In my house, we dialed it way back this year. We gave what we could to others. We focused on gratitude. We supported local establishments by ordering a big lasagna for Christmas Eve from a family-run Italian restaurant and an overly-iced (I loved it!) gingerbread cake from a cozy bakery. Good news.
We are talking about mental health issues more. People are suffering AND people and institutions are recognizing that suffering and, dare I say, further de-stigmatizing mental health issues. Good news.
Time continues to march forward, and summer is coming. Good, good news.
CARRIE O’NEIL, ESQ.
Senior Vice President & Claims Counsel