Catherine Richmond Presentation (Aon Canada)

Report
Flint Transfield Services Limited
Directors’ & Officers’
Liability Insurance
Catherine Richmond, LLB, CRM
Senior
President
Directors’
andVice
Officers’
Liability
Aon Canada
presented by
[email protected]
Aon Reed Stenhouse Inc.
May 2014
July 2009
D&O Litigation Trends
Canadian Securities Filings by Sector 2013
Source: NERA Economic Consulting
US Filings against Canadian Companies 2013
Source: NERA Economic Consulting
Source: Trends in Canadian Securities Class Actions: 2013 Update, NERA Economic Consulting
Overview of D&O Insurance Program
Broad Form A-Side DIC* Coverage
BROAD FORM
(DIC)*
EXCESS A-SIDE COVERAGE
 Drops down to primary if underlying insurance:




wrongfully refuses to indemnify
is financially unable to indemnify
is rescinded
is subject to bankruptcy/financial impairment
 Is non-rescindable for any reason
*DIC = Difference In Conditions
Annual, Aggregate Limit
A-SIDE COVERAGE
B-SIDE COVERAGE
C-SIDE COVERAGE
EXECUTIVES’
PERSONAL ASSETS
PROTECTION
CORPORATE
BALANCE SHEET
PROTECTION
CORPORATE
ENTITY
PROTECTION
(securities claims only)
NO DEDUCTIBLE
DEDUCTIBLE
D&O Liability: Hot Topics
1. Purchasing decision changing – Directors and Officers
engaged
2. Program structure
– Who should be insured?
– Adequacy of Limits
– Side A—Difference in Conditions (“DIC”)
3.
4.
5.
6.
7.
International Placements
M&A
Choice of Insurer
Indemnification
Northstar Decision – Environmental Remediation
6
Northstar Aerospace Case
(Baker v. The Ministry of The
Environment – Ontario)
Northstar: Background
•
•
•
•
1981 – 2009 : Parts manufacturing facility operated in Cambridge, ON
2004: Pollution remediation starts
2012: Northstar Aerospace goes bankrupt
2012: MOE takes over remediation efforts and files regulatory action
against 12 former D&O’s
• 2013: D&O’s settle with MOE for $4.75 million
8
Northstar and D&O Insurance
• Pollution Matters:
– D&O meant to cover defense costs and financial loss
– Will not cover clean-up costs, property damage
– Excess to other insurance policies (EIL, GL)
– Coverage Issues:
› Remove pollution exclusion
› Side A Difference in Conditions
› Aon is working on wording to address remediation liability to provide
express protection to directors and officers
Northstar and EIL Insurance
• Environmental Impairment Liability (EIL)
– Covers pollution conditions that commence after inception
date
– Site-specific
– Covers remediation expenses and bodily injury/property
damage
– Coverage Issues
›
›
›
›
Survives bankruptcy of the insured?
Directors and officers named?
Challenges insuring known problems
Specialized wordings
Thank You
11

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