Insights

The large-scale implementation of artificial systems has created a challenging risk environment. In addition to risk uncertainty, potential unrecognized liabilities and confusion pertaining to best practices regarding controls and oversight, policyholders must navigate a complicated insurance marketplace which can be equally daunting, especially as reactions from insurers diverge. Some carriers have filed AI exclusions, others have remained silent, and a growing number have affirmed coverage, either through endorsements, or stand-alone AI policies.

Corporate officers looking to protect the board and corporate entity, often pursue the appropriate insurance policies (at appropriate limits), which is a wise first step. When securing coverage and assessing such policy terms and the structure of the insurance program however, there are a number of considerations that should be made.

Broker dealers and investment banks operate in an extremely litigious environment resulting in costly E&O insurance premiums and large retentions. Even when firms operate at the highest standards, misstatements and errors of its registered reps create vicarious liability and generate claims involving failure to supervise. Statistically 70-80% of all claims are brought against the firm – either solely, or alongside the registered rep involved.

When structuring D&O, E&O or Cyber insurance for an acquisition, there are 2 distinct time periods: 1) wrongful acts or incidents that occurred before the acquisition, and 2) those that occur after the acquisition. Most insurers will provide the purchasing company with automatic coverage for newly acquired subsidiaries, however they only agree to provide such coverage for (future) wrongful acts asserted after the acquisition date.

Co-Published with Geoffrey Fehling and Michael Levine, Partners at

Insurance Premiums only ever seem to increase. Here are some tips for manufacturers, distributors, retailers and wholesalers, looking to reduce their premiums.

When cyber incidents affect investment banks, advisors, and broker-dealers, the resulting damages are often significant, given the transactions involved. Few industries are more susceptible to such large damages. Most financial firms are already very aware of the risk and the importance of cyber insurance. One of the most overlooked benefits of maintaining a cyber policy, is the comfort of having a response team at the ready. Cyber incidents are chaotic and can create significant confusion.

As an M&A consultant or broker-dealer / investment bank providing M&A advisory services, implementing a well-structured insurance program is critical. Navigating the different insurance solutions however can be a bit dizzying.

Medical practices and healthcare facilities are subject to some unique litigation. When structuring insurance for healthcare institutions, policyholders should be acutely aware of these unique risks and whether or not their D&O, E&O, or other specialized policies, will respond when such claims arise.
 

When structuring D&O insurance, one of the most difficult questions to address is, how much is enough? You’ll often hear brokers referring to limit adequacy or insufficiency, but what exactly is an adequate limit? When deciding on an optimal limit, there are a number of factors that can affect both the likelihood of a claim, and the potential severity of a claim, both of which need to be considered when structuring coverage.