Corralling D&O Defense Costs: A Necessary Partnership Between Carriers and Insureds
As the size of D&O settlements continues to escalate, there is less certainty today than ever before that a company’s D&O insurance program will be sufficient to fund all losses incurred by directors and officers when allegations of wrongdoing arise. Similarly, it is far from certain that indemnification from the company will be available to pay those losses. As a result, directors and officers have a strong incentive to preserve the D&O insurance proceeds wherever possible and to partner with the insurer to assure that the D&O insurance program is depleted by only reasonable and necessary losses. In particular, directors and officers should actively participate with the insurer to manage defense costs, thereby maximizing the protection afforded by the D&O insurance program.