Last month, D&O insurance lawyer John McCarrick and D&O insurance executive Paul Schiavone published a guest post on Kevin LaCroix’s blog, The D&O Diary, titled “Is it Time to Revisit the Scope of D&O Coverage?” John and Kevin’s post has triggered response posts from four policyholder advocates: Kevin of RT ProExec (response at the bottom of John and Paul’s post); Paul Ferrillo of Weil Gotshal; Gil Isidro of Woodruff Sawyer; and Francis Kean of Willis Towers Watson.
They have joined issue over the following question: should D&O insurance coverages that expanded during the recent soft D&O insurance market be pared back now the market has hardened?
I appreciate the perspectives on both sides of this debate – insurers understandably would like to be paid appropriately for the risk they are taking, and brokers and policyholder lawyers want to continue to deliver good value to their clients and protect the significant gains they’ve made for them.
But I believe we need to ask three more fundamental questions:
(1) Is the current D&O insurance product structure still the right one?
(2) Are public company directors and officers better off, in individual cases and/or overall, engaging whomever they want to defend them and devising their own litigation strategy, with limited ability by carriers or brokers to guide them?
(3) If officers and directors would benefit from greater involvement by insurers and brokers, how can we achieve it?
I strongly believe that the D&O insurance product’s one-size-fits-all feature is ill-suited for the shape of securities litigation today, in which the plaintiffs’ bar is increasingly diverse and creative and the defense bar is splintered and increasingly unspecialized. See, for example, my multi-part series “The New Securities Litigation Landscape: How D&O Insurers and Brokers Can Help Defendants Navigate” and my most recent D&O Discourse post, “Putting ‘Litigation’ Back in Securities Litigation.”
I’m actively discussing these three issues and the D&O Diary debate with many insurer and broker friends, and I know many of you are as well. I’m cautiously optimistic that these discussions will yield a D&O insurance product that functions better for everyone – insurers, brokers, full-time securities defense lawyers, and of course, directors and officers.
I’ll be writing more about these issues in the coming months. Stay tuned!