Jimi Hendrix famously sang in All Along the Watchtower: “There’s too much confusion, I can’t get no relief.” If you have been watching the directors and officers (D&O) landscape, the last year has been a confusing haze of activity. If we take a closer look, some patterns emerge that are understandable. Other developments are so new that we don’t know if
they are patterns, trends or idiosyncratic currents.
For carriers struggling with the continuation of soft D&O
markets, there is little at the outset of 2018 to offer assurance of
direction. The thin mix of possible market advantageous developments juxtaposed with market softening trends leaves many
carriers with early conclusions that 2018 will be another year in
which they “can’t get no relief.” In addition, the D&O market is
evolving as headline losses and technology present new risks.
However, let’s explore what we know, where we are, and why
2018 portends continued uncertainty.
Crossing the Delaware (state court line)
into Federal Courts
It shouldn’t be news that the biggest trend of 2016 and 2017 was
the bomb cyclone of securities class action filings. Spiking securities class action filings was perhaps the biggest buzz of the last
24 months. If you missed the news, here is the data: In 2017,
approximately 400 securities class actions were filed.
Close to 300 actions were filed in 2016. These filings outnumber all filings for the prior 20 years with the exception of a single
year, 2001, when IPO laddering cases ballooned to nearly 500. In
early 2016, everyone stayed riveted to the quarterly statistics to
see if filings would remain high. Then, as 2016 closed, the question was whether the filing frenzy would continue. It did.
However, 2017 dwarfed the 2016 figures that first raised alarm
bells that “the sky [was] falling.” Taking a page from Henny
Penny, a closer look revealed that some of this activity was fall-
D&O LIABILITY TRENDS
Cyber risks, the “Weinstein Effect”
and shareholder activism are new problems
By Jane Mandigo