Directors and officers liability insurance

It's simple.

Because it already exists within, say, PI, or it exists within D&O and GL to a certain extent, a kind of silent AI that's already within, within the portfolio.

So kind of putting a blanket exclusion on for that doesn't really make sense.

Yeah.

I think it, it's, it still feels like it's, you know, step by step.

I mean, I was just, you know, I was asking people about, you know, more widely about AI and how it might affect other lines of, of business, because as you say, it kind of has, you know, potential to have losses in D&O or professional liability.

I was posing the question, is there going to, you know, might there be a, an AI class that might provide cover for, you know, across classes rather than having it sort of, uh, separate endorsements? I think the response from one executive was, "Well, I think it'd be, you know, a lot, a lot neater if you could have a single AI class," but that's not the way the market is, is going.

It'll be looked at, you know, on a, uh, sort of a class-by-class business and about how different lines choose to deal with, with AI.

... and the risks associated in different ways, I think, you know, I think the policies will evolve to respond to that.

It sounds like I've had similar conversations as well.

I mean, particularly, um, if you're taking a, a potential D&O risk, right? If, if, if a, a bad decision's made based on, on the use of AI, the question that is still potentially unanswered is who...

where does liability lie? And the market kind of feels that ultimately, if it's a director making a decision, it's still the director's decision, right? So- Can you really exclude AI from that when it's being, you know, used so prevalently? I suppose the reason it's, it's happening in cyber first is, is that it's, it's, I guess, n- easier to kind of quantify w- what is an AI risk and what, and what is, what is not, right?

So, although the insured was able to negotiate for coverage with its primary and a majority of its excess layers, this loan holdout was able to successfully avoid covering the matter.

The next case I'm going to be highlighting concerns D&O policy and its retroactive date exclusion.

In this matter, an EV, an electric vehicle manufacturer, and certain directors and officers were investigated by the SEC for misrepresenting vehicle orders, the number of vehicle orders they had received, which then later spawned litigation.

The insured's DNO carrier denied coverage, arguing that the claims were all related to conduct that occurred prior to the inception of the policy and thus fell within the policy's retroactive date exclusion.

So I think there's a lot of different angles to the exposures here.

For us, we're really going back to the lines that I used to be an underwriter for, the D&O, E&O, EPL.

And we have basically two products, one that is truly more of like an excess policy and again, kind of more of that above where they're currently purchasing their policies.

Then we have more of like a primary package product as well.

Directors and, directors and-

Oh, D&O

... officers-

Yeah

...

so, so he was...

I mean, now, uh, you know, D&O policies have other uses, of course.

Uh, and I'm exploring the use of media policies, um, to, to try to fill that gap as well.

And so I sat through a deposition that day, 'cause I was getting deposed related to this, and, you know, all of this was covered in a, in a, uh...

For me, it was like an insured case, so, 'cause my D&O insurance covered it, but...

And we had done nothing wrong.

They just didn't wanna take the deal, and they didn't like the fact that everyone else did, and they did okay with it.

So it's a good rule of thumb when you're a founder.

You know, do you have this yet? Do you have DNO insurance? Could you talk to your broker? Would you qualify? Would a carrier underwrite you? If the answer is yes, then you're probably kind of at that stage where you might want to get D&O insurance and you might want to be ready to actually put an independent on your board.

You can put an observer there first, and that might be someone you want to then make your first independent.

So in terms of the fundraising, I think this is all very relevant because It's all too early until it's way too late, right? You know, to be thinking about this.