Directors and officers insurance coverage for Stanford Financial Group losses.
The Bureau of National Affairs recently wrote an article about a new court decision discussing directors and officers insurance coverage for officers of Stanford Financial Group. In the BNA Corporate Accountability Report, reporters Tom Edmondson and Tina Chi discussed the decision Pendergest-Holt v.
Certain Underwriters at Lloyd’s of London, No. 10-20069 (5th Cir. Mar. 15, 2010). (BNA has made the full text of the decision available here.) In the lede, Mr. Edmondson and Ms. Chi explained:
The Fifth Circuit’s recent ruling in Pendergest-Holt v. Certain Underwriters at Lloyd’s of London underscores the importance of the wording of the prerequisite provisions in the conduct exclusions in directors and officers insurance policies, corporate insurance attorneys told BNA in recent interviews.
The decision discussed the advancement of defense costs under a directors and officers insurance policy that the London insurance market (referred to as Lloyd’s of London in the story). The story discussed how the court interpreted policy exclusions and limitations, and that the court rejected the insurance company’s interpretation of how the money laundering exclusion applied.
The article also quotes me at the end, providing some pointers and best practices that I gave for policyholders in D&O and other insurance claim disputes. For example, the article states:
Insureds should also keep in mind that when they want to make a claim under an insurance policy, any
“high-dollar” potential loss, claim, or actual claim will likely cause the insurance company to seek opinions
from sophisticated coverage counsel that represent insurance companies, Godes said. “These insurance
attorneys will advise in terms of what provisions and exclusions may apply,” he said.
Thus, “insureds and policyholders are well advised to take the same approach as these insurance
companies and have counsel involved early so that they can better protect their own rights,” Godes said.
For the rest of my advice, you’ll have to check out the full article. My firm is hosting a copy of the article online, which can be found here.
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