Summary: Two AmTrust EXEC claims team members, Dan Beatty and Erin Zimmerman, attended the PLUS D&O Symposium held in early March in New York City. This article provides highlights on the key issues and trends in the D&O insurance landscape they learned at the conference.
By Erin Zimmerman and Dan Beatty Highlights from the 2022 PLUS D&O Symposium
The PLUS Directors and Officers (D&O) Symposium is the largest D&O professional liability insurance event of the year. The conference brings together thought leaders in the D&O industry to learn about recent trends and issues, the state of the market and gain insight from experts in the industry. AmTrust EXEC was a platinum sponsor of the 2022 event, and two claims team members, Dan Beatty and Erin Zimmerman, attended and shared some of the highlights from the symposium.
Erin Zimmerman and Dan Beatty Securities Litigation May Rebound in 2022
One big takeaway from the conference is the possible increase in securities litigation, which had peaked in 2019 and decreased in both 2020 and 2021. However, plaintiffs may be encouraged to increase filings since 2021 evidenced both a higher total settlement value for securities class actions ($3.2B) and total actual settlements.
In addition, there may be an upswing in SEC investigations, as the agency has signaled it will target specific areas of the financial market, including:
- Special purpose acquisition companies (SPACs)
- Cryptocurrency, crypto trading platforms and other digital assets
- Executive compensation/perquisites
There was also a robust discussion about the SEC moving away from settlements where a company simply pays a fine to the SEC without admitting wrongdoing. Rather, there is an expectation that the SEC will start to require specific admissions by either the company or individual D&Os in future settlements.
An Increase in Derivative Lawsuits
Derivative lawsuits have both increased in frequency and settlement value. Seven out of the ten highest derivative settlements occurred in 2020 and 2021. Derivative cases alleging breach of directors’ duty of loyalty have historically been difficult to plead, but recent case law indicates a shift by the courts. These cases found that plaintiffs’ successfully pled that directors breached their duty of loyalty by failing to oversee mission critical aspects of the company’s business.
As it relates to D&O insurance, there are a couple of key points from both the recent case law and increased settlement value. First, insureds should make sure to purchase Books and Records (B&R) coverage. Failing to respond to a B&R demand properly could lead to unnecessary derivative litigation, particularly considering the recent Delaware case law. Having the right coverage in place will allow a company the time and resources to respond in a thorough manner that may prevent unnecessary derivative litigation. Second, the increase in settlement values may present increased exposure for Side A coverage. Insureds may want to re-examine whether they have sufficient Side A coverage in place, and insurers may need to re-examine their underwriting procedures to reflect the increased potential for Side A exposure.
Directors and Offices Insurance Coverage from AmTrust Financial
AmTrust EXEC understands the unique risks facing executive teams at privately- or publicly-held companies. We provide creative management liability solutions for their clients, with our experts in underwriting and operations working directly with company decision-makers. Our
products include
Management Liability coverage,
Employment Practices Liability coverage,
Side A Directors & Officers Liability and more.
Contact us for more management liability information.
Erin Zimmerman is a claims professional in the Complex/Specialty Claims Group handling public and private company D&O and EPL matters. Before bringing her skills to the insurance carrier-side of the industry, Erin was a seasoned attorney with 15 years of experience in both coverage and defense litigation.
Dan Beatty handles D&O and Financial Institutions claims in AmTrust’s Complex/Specialty Claims Group. Prior to his role as a claims professional, Dan practiced law in the insurance industry for almost a decade, advising and representing insurance carriers on coverage matters. 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.