The second session of the PLUS D&O Symposium involved a broad discussion of D&O coverage disputes.  The moderator and panelists were as follows:


Joel S. Townsend, SVP & Worldwide D&O/DFI E&O Claim Manager, Chubb & Son


  • Norman Allen, Esq., Senior Managing Director, Carpenter Moore Insurance Services, a NASDAQ OMX Company
  • Joseph G. Finnerty, III, Esq., Partner DLA Piper LLP
  • Kevin P. Gadbois, JD, CPA, Divisional Executive VP, Great American Insurance Company
  • Jane E. Keller, Esq., Senior VP and Chief Claims Officer, The Navigators Group, Inc.
  • Lorelie S. Masters, Esq., Partner, Jenner & Block LLP

The Panelists discussed which D&O policy terms and conditions matter most and are typically determinative of claims outcomes.  The Panel agreed, albeit from different perspectives, that the definitions of “Claim” and “Loss” give rise to the majority of D&O coverage disputes.

The Panel relied on a recent D&O survey as the framework for their discussion.  The survey posed questions to a fairly even mix of professionals employed by the insurers and by the insureds.  While the survey is available on the PLUS website, a few of the notable responses to the survey and discussed by the panel are as follows:

  • 74% - the percentage of respondents that believe the insurance broker is relevant to a positive resolution of a claim.  
  • 60% - the percentage of respondents that say the insurance carrier’s in-house/employed claims counsel are more/most cooperative in the claims process.  25% of respondents believe that the level of cooperation these counsel provide is average.  
  • 80% - of respondents believe that indemnification for disgorgement of profits or ill-gotten gains should be against public policy.  
  • 74% - of respondents believe that indemnification should not be available for D&O’s convicted of crimes.
    • 30% - believe that the insurer should be required to seek to recover payments made in the two situations above.  
  • Who is more likely to pursue coverage actions: 83% of respondents said the insured; 17% said the insurer.  
  • 71% - of respondents believe that insurers are not quick to bring coverage actions.

The Panel noted the following key reasons for D&O coverage disputes (in order of importance):

  1. Unrealistic insured/expectations
  2. Aggressive policyholder
  3. Vague D&O policy language
  4. Aggressive D&O insurer
  5. Inconsistent tower language
  6. Ineffective broker support

The Panelists also discussed the use of litigation management guidelines and their importance when defense costs erode policy limits.  Some of the suggestions made by the Panel include: insurers should work with the insured to manage the costs of defense counsel; insurers should receive regular billing statements so that there are no surprises; and, the insurer should make certain that defense counsel adheres to the litigation management guidelines, but allow for flexibility.

One interesting survey result is that respondents prefer resolving coverage disputes -- in order of importance -- by mediation, litigation, and arbitration.