For directors and officers liability insurers facing a potential influx of claims arising from lawsuits that banking regulators are filing against their insureds, a key question is whether regulatory exclusions in their policies will hold up.
Such exclusions were pretty heavily litigated during the Savings & Loan crisis, according to Kevin LaCroix, a broker with OakBridge Insurance Services in Beachwood, Ohio, who also reported that the coverage cases were ultimately concluded in favor of insurers.
On the basis of the case law coming out of that period, "the regulatory exclusion is enforceable and does preclude coverage" for claims brought by Federal Deposit Insurance Corporation, said Mr. LaCroix, who is also a lawyer and the author of the D&O diary blog.
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