A key issue for D&O carriers is to what extent an underlying carrier’s coverage or claim handling decisions are binding on them both legally and as a practical matter. A recent case from the Ninth Circuit issued in September 2020, AXIS Reinsurance Company v. Northrop Grumman Corporation, substantially limits an excess insurer’s ability to challenge the erosion of underlying limits by payments for uncovered amounts. The law generally is clear that excess carriers may challenge improper erosion of underlying limits by payments of uncovered amounts where their policies provided that the underlying limits could only be exhausted through payment of covered Loss. The Northrop Grumman decision, however, held that an excess carrier can only contest the improper erosion of underlying limits if its policy specifically reserves the right to challenge the underlying carriers’ decision to pay or if the excess carrier proves bad faith/fraud by the underlying carriers. This session will discuss the current landscape of exhaustion law across the county and whether the Ninth Circuit got the issues right as well as the impact of the Northrup Grumman court’s holding on policyholders’ and insurers’ efforts to settle underlying litigation and possible underwriting responses to the decision.
- Kimberly Melvin, Wiley Rein LLP
- Lynda A. Bennett, Lowenstein Sandler LLP
- Michelle Klein, Berkley Professional Liability, a Berkley Company
- Ron Goldstein, Aon
- Todd Greeley, QBE
Time: 1:15 p.m. ET
$395 for PLUS members | $595 for non-members