You always know you’ve hit the right note in a seminar when there is no shortage of unprompted questions from the floor. That was our experience on 14th November when we invited ex-British Airways manager, Keith Packer to give a very personal account of his experience in a price-fixing claim in which he became embroiled.
Perhaps one of the most striking aspects of Keith’s story which culminated in him serving several months in a US State Penitentiary was that he was not accused of any wrongdoing in the USA. Indeed, his only sin was one of omission in failing to prevent potentially anti-competitive behaviour among his team of which he was on notice. Listening to Keith’s story, it was almost impossible not to identity and sympathise with him. I imagine that all of us experienced a “there but for the grace of God…” moment.
To deliver on a promise we had made to the invited audience that this would not just be another D&O seminar, we followed Keith’s story by a panel session made up of Paul Schiavone, Chief Underwriting Officer of Zurich Financial Lines and me. Paul and I had devised a number of “What if” questions for Keith on the assumption that BA had not funded his defence and legal representation costs. (In fact, BA did do so in this case).
The questions posed of Keith included:
- What would I have done had BA not paid my costs – either right at the start or if they had stopped paying along the way?
- How quickly could I have secured funding from my D&O insurers?
- Are there any circumstances in which I might have had to repay defence costs paid by my insurers?
- What other policy coverage issues might I have encountered?
- Would I have been insured for any claim brought by my employer against me?
I don’t plan to run through the answers to these questions. We’d be talking about a short book if I did! There was, though one theme which seemed to emerge consistently from the debate between the panel and the audience which does deserve mention. Conventional D&O insurance contracts tend to be long and complicated. They contain a variety of provisions, some of which are favourable to the insured and some of which (frankly) are not.
Hindsight is a Wonderful Thing
The trick or challenge is to try to ensure that the unfavourable provisions are not visited on those insureds who have not been guilty of fraudulent, dishonest or other culpable conduct. With the benefit of hindsight, it was easy for the audience to understand that Keith fell into the category of “non-culpable” insureds in this sense. Indeed, Paul was happy to confirm that the unfavourable stuff in a D&O wording would not have been aimed at him.
The question which the audience might have been left with though was whether this generous judgment would necessarily have been made in Keith’s favour at the start of his story rather than at the end of it. The case for close scrutiny of all policy terms at the time of purchase is as strong as ever.