Just a year or two ago, indemnifying directors and officers at financial services companies against lawsuits by shareholders or regulatory agencies was a relatively simple matter. The company could agree to pay defense costs and any settlements or judgments and/or purchase D&O insurance to cover the directors’ and officers’ liability directly and even compensate the company for advancing the costs. D&O coverage was widely available for the financial services industry then, with insurers jostling each other to win the business through ever-decreasing premiums and more liberal terms.
Yet because of turmoil in the financial and credit markets, combined with dramatic rises in litigation, general counsel at financial services companies will be facing a sharply different landscape in D&O insurance in 2010. Protecting directors and officers will require new strategies for selecting, buying, and negotiating policies—with counsel playing a larger role in the process.
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