Written by Dan Beatty, Complex/Specialty Claims D&O and Erin Zimmerman, Complex/Specialty Claims Adjuster AmTrust’s
Dan Beatty and Erin Zimmerman shared their takeaways from the 2023 PLUS D&O Symposium in New York City.
This year’s PLUS D&O Symposium was more popular than ever, with over 1,400 attendees and a robust group of panelists discussing in-depth topics on the Directors & Officers (D&O) insurance industry. A few issues covered at this year’s Symposium included the current state of the D&O market, the future of securities litigation and new regulations on ESG disclosures.
Highlights from the 2023 PLUS D&O Symposium
An overall theme of the panel discussions focused on the idea that the current D&O insurance market is out of balance. Insurers are facing a soft underwriting landscape with many new entrants bolstering competition, yet the volume and severity of claims have been worse.
Below are some additional highlights from this year’s Symposium:
SEC Proposed Rules to Standardize ESG Disclosers
Shortly after last year’s PLUS D&O Symposium, the
SEC released its proposed regulations concerning ESG disclosures. This year’s Symposium discussed the complexities of these rules and the potential risk of future loss. For example, the regulations would require registrants to disclose different ways they are contributing to greenhouse gas emissions both directly and indirectly (including upstream/downstream partners’ use), as well as disclosing how climate-related risks will have a material impact on business and the company’s financials.
Some have raised concerns that the new ESG disclosures are overly broad, adding additional costs for compliance and exposure to increased SEC investigations and securities claims. Proponents of the rules advocate that they are essential in combating climate change and preventing corporate greenwashing.
Current SEC Enforcement Program
Another topic of discussion was the overall
SEC enforcement program under the current administration, which includes new disclosure requirements related to Rule 10b5 -1 trading plans (operational Feb. 2023),
increased disclosure requirements for SPACs, focus on cybersecurity, and proposed ESG disclosures discussed above. As a result, companies should look to purchase additional entity coverage for SEC inquiries, which is generally not covered under standard D&O forms.
Increased Cost of Settlements
Panelists also discussed the continued increase in the number of derivative matters and the cost of settlement over the years. Conversations also included that the increased volume of Section 220 demands are a precursor for this trend to continue.
Securities Class Action Lawsuits
Regarding securities class actions, there was a discussion of plaintiffs’ firms moving beyond cases based solely on financial metrics to cases involving a failure of internal controls. There was also a general expectation that claims counts in both public and private D&O markets will increase over the next few years because of several factors, including:
- General economic decline
- Increased financial insolvency
- Limited access to capital markets
- High-interest rates
Future Risk Issues
Panelists also identified risk issues that they expect to be more prevalent five years from now, including:
- Artificial intelligence and its effects on corporate decision making
- Litigation funding in securities class actions
- How changing demographics may present problems for companies to raise capital through traditional methods like IPOs
What is the PLUS D&O Symposium?
The PLUS D&O Symposium brings together the D&O professional liability insurance thought leaders from around the globe for two days of networking, business development and educational seminars. It is sponsored by the
Professional Liability Underwriting Society (PLUS), an organization recognized as the primary source of professional liability educational programs, networking events and information regarding professional liability.
This material is for informational purposes only and is not legal or business advice. Neither AmTrust Financial Services, Inc. nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is appropriate or suitable for any specific business or legal purpose. Readers seeking resolution of specific questions should consult their business and/or legal advisors. Coverages may vary by location. Contact your local RSM for more information.