What are Lenders' Liability claims? - ✔✔Lenders' Liability claims are brought by borrowers,
shareholders or regulatory agencies challenging the validity of a loan agreement or the bank's
loan practices.
On what duty of Directors are claims alleging negligent lending practices based? - ✔✔Duty of
Care
What are the two types of risk created by a Bank offering banking services on its website? -
✔✔The two types of risk are of (1) Transaction Errors and (2) the risk of a breach in security
that jeopardizes the privacy and safety of the customers' information.
A Soft Market - ✔✔Increased capacity, lower premiums, broader coverage, more
competition and entrance of companies into the market
Hard Market - ✔✔Decreased capacity, higher premiums, narrower coverage, less
competition and exit of companies from the Market
How does the stock market effect shareholders' claims against Directors and Officers? -
✔✔When the stock market is rising, shareholders have no losses and so they have no reason
and probably no inclination to sue. However, when the stock market is declining, shareholders
suffer losses, have reason to sue and may see the Company's management as responsible for
their losses.
What are factors external to the insurance industry that can drive a hardening of the D&O
Insurance market? - ✔✔External factors that can affect a hardening market include (1) Stock
Market and Interest Rate fluctuations (2) Changes in the economy (3) the introduction of new
, types of losses or litigation and (4) Unexpected catastrophes that affect the entire insurance
industry.
How have litigation funding firms (3rd Party Litigation Funding) changed their focus? -
✔✔They have moved away from single lawsuit funding arrangements toward investment
portfolios of lawsuits. Example: Burford, at founding, invested 100% of its funds in individual
cases; in 2015 invested just 13% in individual cases. These changes have allowed such firms to
deploy money faster and created more consistent returns for investors. Burford's IRR (internal
rate of return) is 28% - impressive.
What is the purpose of an excess D&O policy and why would a company need to buy one? -
✔✔An excess D&O policy provides additional limits of coverage for the Insured. A company
buys one or more excess policies when its primary insurer cannot or will not provide higher
limits of coverage.
What is a follow form policy? - ✔✔A follow form policy is one that is based on the primary
policy and/or some other underlying coverage. The follow form policy does not broaden the
coverage but follows the terms and conditions of some identified underlying coverage.
What is an attachment point? - ✔✔An attachment point is the amount of loss that triggers
coverage. For an excess policy, it is the underlying policy's limit of liability. When the limit is
exhausted, the attachment point is reached for the next policy in the coverage tower.
What three major areas should an underwriter of an excess D&O policy evaluate? - ✔✔The
Underwriter for an excess D&O policy should evaluate (1) the company requesting the policy (2)
the Insurers for the primary policy and underlying policies and (3) the primary and underlying
policies.
Acme has a traditional D&O policy with a $25M limit. Acme wants $50M in total coverage.
ODDO insurance can provide an excess policy with a $15M limit and an attachment point at
$35M. What other policy does Acme need? - ✔✔Acme needs an excess policy for $10M xs
$25M. Then the ODDO policy will sit excess at $15M xs $35M...completing the $50M tower.
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