1. Calgary RIMS Chapter Meeting March 1, 2012 8:00 am-9:00 am
Understanding Key E&O, D&O and Fiduciary Liability Insurance Issues

2. Presentation Overview
Insurance Inventory
D&O Claims
Fiduciary Liability Claims
E&O claims
Coverage, Conditions & Exclusions
Claims Handling Concerns

3. Liability Policies Directors’ & Officers’ (“D&O”) Policies
General liability / Umbrella Liability Ins.
Endorsements for fiduciary coverage
Errors & Omissions (“E&O”) Policies
Fiduciary liability policies
Employment liability insurance

4. D&O Liability Insurance Policies
Coverage Concept
Interaction with Indemnity Obligation
Advancement Issues
Exhaustion Arguments

5. Professional Liability Policies
Professionals are common targets whenever things go wrong and people lose money
Employers are too now

6. Basic E&O Coverage Concept
Wrongful Act
Professional Service; Omission; Investment; Retirement
Usually Causing Economic Injury
Bodily injury for medical professionals
Property damage for architects, engineers, and others

7. Wrongful Acts & “CAPACITY”
any actual or alleged breach of duty, neglect, error, negligent misstatement, misleading statement or omission unintentionally committed
solely in the conduct of the Insured’s Professional Services as specified in the Declarations

8. Notice “Notice of circumstances” likely to give rise to a claim
Interaction with ERP, Run-Off
Late Notice: claims made vs. occurrence

9. Cooperation Clause investigation defense settlement
authorize carriers to obtain records
Mis-used by insurance Companies

10. Defense Coverage Approval of counsel, costs, and settlement?
Improperly withheld
Insurance company pays defense costs
If policy does not specify, insurance company should have to advance costs

11. Fiduciary Risk Exposures
Claim Risks
Employee / beneficiary suits
choppy equity markets / price fluctuation / wrong “menu”
Erosion of health care benefits
Defense Costs
Punitive damages?
Government Proceedings/Investigations

12. Basic Fiduciary Coverage Concept
Insurance company promises to pay:
Defense costs; and
Damages:
Compensatory?
Punitive/exemplary/multiplied damages
Defense coverage:
Policyholder picks defense counsel
duty to defend?

13. Scope of Coverage Concerns
“capacity” as “fiduciary”?
What about errors and omissions by plan, employer, managers and administrators?

14. Compensatory and Punitive Damages
Exclusion for “benefits due”:
Damages?
Punitive damages:
Insurable in jurisdiction in question?
Choice of law provision in policy?

15. Competing Interests in Defense (D&O, E&O and Fiduciary)
Policyholders Want Best Representation:
Often need for specific expertise;
Potential conflicts necessitating multiple and separate counsel?
Insurance Companies Want to Spend as little as possible:
Improper cap on rates of counsel.
More Conflicts of interest?
Former management vs. New management;
D&O vs. Entity;

16. Risk Management Issues
Seamless integration policies?
Choice of law and arbitration
Choice of counsel provision
Insurance application
Severability (who knew what?):
Non-disclosures in insurance application;
Severability of bad acts exclusions as between Insureds.

17. Alex D. Hardiman, Esq. (212) 278-1588 ahardiman@andersonkill.com
Thank You
Alex D. Hardiman, Esq. (212)