The third panel of the first day of the PLUS D&O Symposium focused on current issues surrounding Excess and Side A insurance policies. The panel, which consisted of brokers, underwriters and counsel for policyholders, discussed the following topics:
- Exhaustion: The viability of so-called "limits shaving" deals has been tested in recent years by such decisions as Comerica and HLTH, in which courts have prohibited insureds from "gap filling" in order to access the limits of their excess policies. One panelist stated that in the context of purchasing D&O insurance, he generally advises his public company clients to request that excess insurers include explicit language in their policies that allows the insured to engage in limits shavings deals. According to this panelist, limits shavings deals provide the insured with some flexibility in settling an underlying lawsuit where coverage issues exist.
- Uniformity of policy language throughout the tower: the broker panelists generally favored uniformity in policy language in each of the excess policies. Where the policy wording varies among the excess policies, insureds often face difficulties in adjusting complex claims.
- Types of Side A policies: the panelists also discussed the relative strengths and weaknesses of the variants of Side A policies. One panelist stated that "broad form" Side A policies are critical because they provide "sleep insurance" for directors by covering a broad range of risks that may not be covered by the underlying policies. The panelists also discussed the growing popularity of Independent Directors Liability ("IDL") policies, which generally provide separate Side A limits to independent directors that cannot be accessed by the officers and inside directors. According to some of the panelists, this type of product is critical for independent directors, whose compensation is minimal compared to the risk of loss of personal assets in the context of securities litigation.