2022 Directors & Officers Liability Insurance: Key Coverage Issues for Corporate Executives

Description

After three years of the COVID-19 pandemic followed by the economic uncertainty and new executive regulators, the landscape for director and officer liability has changed. Corporate executives still face significant risks and D&O liability insurance is necessary protection, particularly related to certain issues.

D&O insurance policies are not written on a one-size-fits-all form and often are subject to negotiation. Even if insurance is acquired for a particular purpose, the policy may include language that limits coverage. Insured's counsel must ensure that the policy provides the sought for coverage and adjust for additional risks that arise due to changed circumstances or actions by the company.

Recent cases are instructive regarding areas where D&O insurance coverage might be subject to dispute. The rise in the use of SPAC IPOs will continue to give rise to claims. In 2020 and 2021 dozens of class action lawsuits were filed against companies suffering from COVID-19 outbreaks, companies financially or operationally impacted by the pandemic, and companies developing products or treatments in response to COVID-19. While direct lawsuits related to COVID-19 continue to be filed in 2022, director and officer lawsuits involving the secondary effects of COVID-19--such as supply chain disruptions caused by seaport backlogs, shortage of truck drivers, or otherwise--may become more prominent.

Under the Biden administration, there has been increased governmental scrutiny of anti-competitive behavior by insurance companies. In antitrust claims, the language of the criminal conduct exclusion--i.e., dishonest, fraudulent, malicious, and criminal acts--should be reviewed to determine whether its application requires a final adjudication exhausted by appeal or only "in fact" confirmation of such conduct.

Listen as our authoritative panel examines common provisions and exclusions of D&O insurance policies as well as the provisions that are often heavily negotiated. The panel will discuss lessons from recent cases regarding coverage disputes and potential pitfalls when reviewing and negotiating D&O policies.