The backdating of options has affected a number of public companies, and will be impacting the D&O (directors & officers) insurance market (see our prior post). McDermott Will & Emery has written a summary of the options backdating issue and the potential D&O coverage implications (see here).
A few key point made in the summary:
An investigation is likely not a coverage trigger
If there is reason to suspect that circumstances have occurred that could result in a claim, it is imperative that notice of a potential claim be provided to the D&O insurer during the policy period
Future D&O coverage is likely to exclude coverage for options backdating
Note that the last point may be moot because, in many cases, prior knowledge of a circumstance that could lead to a claim that is not reported in the proper policy period may be excluded in subsequent policy periods.
Chubb has disclosed that it has received D&O claims involving options backdating (see here).
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