Coronavirus – a bumpy road ahead for D&O
Globally, insurers are waiting to see how COVID-19 related exposures will impact their respective D&O books. RPC has accessed a number of pre-eminent insurance practices in the major claims centres to swap notes on the possible D&O exposures in their respective jurisdictions and how they envisage insurers might act in response.
Taking this global perspective, the various law firms anticipate a spike in notifications to D&O policies, but the exposures will take different forms and happen at different speeds.
Securities class action claims
There are already a number of reported COVID-19 related class action claims, inevitably filed in the United States. One relates to statements made by a cruise line operator relating to its business preparedness to mitigate the risks of COVID-19 and its financial resilience to cope with the pandemic. Another relates to a pharmaceutical company’s allegedly misleading statements regarding the testing of a potential vaccine. Read more.
Contingency planning and insurance
At present the COVID-19 timeline spans only from December 2019 – for many of us it feels far longer of course. Companies like governments are deflecting criticism for not acting earlier when, it is argued by some, there was a reasonable basis to foresee what might happen. Read more.
COVID-19 has forced company directors to make major decisions about how they operate their businesses. Employees are being required to work differently and in some cases, as a product of their employment, are themselves at a heightened risk to contracting the disease. In some sectors this means directors exercising their best judgement whilst around them relevant legal and regulatory standards relating to their employees are changing. Read more.
Insolvency related D&O exposures
Despite many countries implementing government backed schemes providing financial assistance to help companies survive the effects of COVID-19 the world is braced for a global recession. It is difficult not to foresee large scale corporate insolvencies taking place in the coming months. Read more.
How are Insurers responding to COVID-19?
Underwriters are now grappling with the question of whether they should impose specific Covid-19 exclusions, which on the one hand may protect them against future exposures but on the other hand might open them up to blanket notifications and potentially irrecoverable loss of business. Read more.