Regulatory Exclusions May Reappear After Meltdown

Regulatory Exclusions May Reappear After Meltdown - 4/24/2009

Home

Index of Filings

News and Press Releases

Filings

Decisions

Settlements

Litigation Activity Indices

Top Ten List

Annual/Quarterly Updates

Clearinghouse Research

Articles & Papers

Search

Related Sites

About Us

Local Rules

Sponsors

Register

_______________
Copyright © 2001
Stanford Law School

2009 News and Press Releases

SEARCH

News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

Regulatory Exclusions May Reappear After Meltdown
Christie Smythe

Securities Law 360. April 24, 2009
_________________________________________________________________________

EXCERPT: To many observers, the rash of bank failures over the past year is like a flashback from the savings-and-loan crisis, complete with a surge in regulatory actions. That, some insurance professionals say, may spark the reappearance of a feature that emerged in the 1980s and 1990s in the financial services insurance market: regulatory exclusions in directors and officers policies. D&O policies, which include a broad range of liability coverages from company to executives and board members, generally provide standard coverage for costs associated with investigations by regulatory authorities such as the U.S. Securities and Exchange Commission, according to insurance professionals and insurer policy information. The policies could encompass both formal and informal probes, providing coverage for individual directors and officers to retain legal counsel and experts or other professionals that might become necessary in responding to government inquiries, industry experts said. But in the aftermath of the S&L debacle – from the late 1980s into the 1990s – insurers responded to a sudden wave in regulatory actions in the banking sector by beginning to include exclusionary language in D&O policies barring coverage of certain regulatory claims, said Kevin LaCroix, a partner and D&O specialist for Ohio-based wholesale brokerage OakBridge Insurance Services LLC. Those exclusions generally pertained to financial services-specific regulators, such as the U.S. Federal Deposit Insurance Corp. and the U.S. Office of Thrift Supervision, he said. In 1995, 50 to 75 percent of D&O policies sold to banks included a variety of regulatory exclusions, according to an article by attorneys Peter K. Rosen and Melissa Gonzalez-Padron at Latham & Watkins LLP. That changed as the banking market improved in the mid-90s and onward up until the current crisis. The market for D&O insurance for financial services companies grew more competitive, and exclusions generally disappeared, according to LaCroix.

Back to News page | Back to Archived News 2009 page | Back to Top

�