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Executive liability insurance needed overseas

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NEW YORK — With the recent uptick in non-U.S. shareholder litigation, it is more important than ever that companies have a directors and officers liability insurance program in place in other countries, says one insurer.

In the past, it was not relevant to worry about D&O coverage overseas, or the legal and regulatory environment outside the United States, but “today, it is extremely relevant,” said Jennifer J. O’Neill, New York-based head of international insurance programs and product development at Allianz Global Corporate & Specialty S.E. in New York. 

She was among the speakers on international D&O issues at the Professional Liability Underwriting Society’s D&O symposium in New York on Thursday. The increase in non-U.S. shareholder litigation was discussed during the session, including the $1.14 billion settlement reached by Dutch insurance company Ageas S.A./N.V. with shareholders in March 2016.

“It is more important than ever you either have program in place, or have what is most needed for the company,” said Ms. O’Neill.  And it is also a matter of looking at the policyholder’s global footprint, and the regulatory risks among other issues.  “The underwriter along with the broker needs to look at the business to determine the best coverage available for the insured,” she said.

There are several different approaches that can be taken, she said.  For instance, the firm could have an international program that has a master policy, and a link to local policies. Another approach is to have local coverage along with separate limits available to individuals and to the entity, said Ms. O’Neill.

“There are many reasons to have a policy in place, but there are also many solutions.  It’s no longer just a one stop shop.  It’s about understanding the insured,” what they are doing globally “and then creating a solution for them,” said Ms. O’Neill.

“We’re increasingly going to have to understand what is happening outside the U.S.” in terms of collective actions, said Kevin LaCroix, executive vice president of RT ProExec, a division of R-T Specialty L.L.C. in Beachwood Ohio, who moderated the session.

From a securities class action perspective, you cannot do too much outside the U.S., said Jonathan E. Richman, a partner with Proskauer Rose L.L.P. in New York.  

Some jurisdictions do not permit class actions at all, while some have only “opt-in” class actions and others only permit class auctions in  substantive areas, such as antitrust, he said.  “There really aren’t that many good options” outside the United States, Canada or Australia, he said.

Among other topics discussed was the increase in litigation funding where investment vehicles, which can include hedge funds, finance  litigation for a percentage of any eventual award. These have become popular in countries that, unlike the United States, do not permit contingency fees as a means to finance litigation.

“It would be ingenuous” to say this could lead to investing a lot of money in frivolous cases, but “it doesn’t make a lot of sense.  Most of the people I deal with, they’re looking at high-stakes cases with strong claims that they are confident will be successful,” said Darren J. Check, a partner with plaintiff firm Kessler, Topaz, Meltzer & Check L.L.P. in Radnor, Pennsylvania.