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Sexual harassment claims are going to remain an issue, while claims against the pharmaceutical industry stemming from the opioid crisis may emerge as an issue as well, said speakers at the Professional Liability Underwriting Society’s 2018 Directors & Officers Symposium.
Brian Duperreault, president and CEO of American International Group Inc., also discussed underwriting as a keynote luncheon speaker at last week’s event in New York.
During a session on which news items today could lead to tomorrow’s claims, speakers pointed to sexual harassment and the opioid crisis.
Discussing sexual harassment, Chris Warrior, head of management liability at Hiscox Ltd. in London, warned, “We’re going to have some fairly large settlements that are going to come out.”
Referring to cases such as those involving Harvey Weinstein, he noted also that some of the litigation is being directed at CEOs who are dominant within their companies.
“It tends to be a group of people who are in firm control of their company” and who tend to be to be “quite egotistical,” he said. The way these companies are reportedly run “suggests these companies aren’t something you can underwrite through.”
David L. Wales, a New York-based partner with Bernstein Litowitz Berger & Grossmann L.L.P., said, “I usually refer to it as a star system. If there is a company with a dominant person, they are more likely to have a problem that will lead to a securities lawsuit,” because their departure’s impact is greater than if a middle manager were committing the misconduct.
The opioid crisis may eventually wind up being a D&O issue involving pharmaceutical manufacturers, said speakers.
The industry is in the “early days in exploring how pervasive it is,” said Mr. Warrior of opioids. “I think we have to wait and see a little bit” how the issue develops, said Mr. Wales, pointing to various government entities’ investigations on the opioids epidemic.
Mercedes Colwin, managing partner at Gordon Rees Scully Mansukhani L.L.P. in New York, gave an impassioned speech about sexual harassment and the influence of corporate culture at the symposium. Pointing to the numerous daily reports on this issue, Ms. Colwin told the audience to make sure to stay strong and persevere. “Be bold, be principled, be honorable,” she said.
Underwriting and data were also on the mind of industry leaders.
In 2018, “the underwriter needs to be back in charge, and at AIG the underwriter is back in charge,” said Brian Duperreault, who was a keynote luncheon speaker at the Professional Liability Underwriting Society’s 2018 Directors & Officers Symposium in New York last week.
Mr. Duperreault also discussed how the use of data can become more scientific and help mitigate risk. But, he said, as an underwriter, “you’ve got to make the call and that call could be ‘no.’”
Mr. Duperreault also discussed the need for young people to come into the industry. The industry must do more to attract them although “insurance has never been an attractive business” to outsiders, said Mr. Duperreault.
During a session on emerging risks, Kevin LaCroix, executive vice president of RT ProExec, a division of R-T Specialty L.L.C., in Beachwood, Ohio, pointed to cryptocurrencies, including bitcoin, which has become increasingly prevalent. Staying away from cryptocurrencies “is not a viable choice,” he said.
Speakers at another session analyzed last year’s increase in securities class actions.
One of the factors in the growth has been the emergence of more plaintiff law firms in this area, especially over the past 18 to 24 months, said Kieran P. Hughes, New York-based vice president at AIG.
“There’s a long learning curve for a lot of your firms, but you’re seeing more and more firms entering” this area and bringing actions against smaller companies, he said, adding there have been “a lot more unfamiliar faces” in demand letters and the filing of derivative suits.
They are taking some of their schooling from firms that have been in this area for a long time, he said. Because it is such a lucrative area, “more and more attorneys are saying, ‘Let me look into how I get into that area,’” and then doing so.
Other speakers at the symposium included John P. Carlin, a partner with Morrison & Foerster L.L.P., who said companies should focus on resilience after being subjected to a cyber attack.
In another session, Alan Dye, a partner with Hogan Lovells U.S. L.L.P. in Washington, said while dealing with a potential cyber attack is uppermost on most company directors’ minds, preparing them for it can be a challenge.
Federal securities class action litigation filings rose to their highest level in 20 years, driven in part by a shift in merger objection lawsuits from state to federal courts, says a survey issued Tuesday.