NU Online News Service
The Supreme Court ruling tightening shareholder lawsuit procedures should help those insurers with a large directors and officers' exposure, said an expert in the field.
The court tightened standards for investor fraud suits against corporations by ruling that plaintiffs must show "compelling evidence" that executives tried to mislead shareholders.
Steve Shappell, managing director of Aon Financial Services Group legal and claims practice, said the directors and officers (D&O) liability market rates are already soft with class actions at an all-time low since the passage more than a decade ago of the U.S. Private Securities Litigation Reform Act (PSLRA).
"Yesterday's ruling should help keep frequency down, and should result in dismissal of a greater number of suits," Mr. Shappell said.
Thus, he said, the market will remain soft and brokers will be justified in asking for continued premium decreases.
In an 8-1 ruling, the court dismissed a lawsuit against telecommunications firm Tellabs by investors who claimed financial statements it had made were overly optimistic.
The ruling was seen as a key interpretation of the PSLRA that aimed to curb "frivolous" lawsuits.
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