The second day of the PLUS D&O Symposium began with a discussion of recent developments in D&O coverage. The first big topic was coverage for investigation costs for entities only. Insurers had already been offering entity coverage for formal investigations where an individual insured was also a target. The panelists observed that recently, policyholders have been looking for coverage for investigations of the company only, as well. The insurer-side panelists felt that this was a drastic expansion of coverage into an area of corporate costs, as opposed to protection of directors and officers.
A related discussion topic was coverage for informal, as opposed to formal, investigations. The panel generally felt that this was a reasonable expansion of coverage for individual directors and officers and avoids the fights over whether a particular director or officer is a “target” of the formal investigation.
The panelists also discussed new coverage that has become available for internal investigations, usually by a special litigation committee in response to a derivative demand. This coverage is generally subject to a sub-limit and/or a retention. Some of the panel members felt that these limitations were unfair, since many of the special litigation committee’s activities could be applied to a later defense. Other panel members observed that, formally, the special litigation committee is independent and not “defending” the company, and that it is important to maintain that formal distinction.