Hunton Insurance Recovery Blog

Directors and Officers (“D&O”) and cyber-related incidents continued to make headlines while ramped up regulatory enforcement and new legislation significantly altered the insurance landscape for both policyholders and insurers. Other noteworthy decisions reinforced the importance of foundational insurance coverage principals. Now that 2023 has wrapped, we highlight and review some of the most significant decisions and insurance developments that will continue to impact the world of insurance in 2024 and beyond.

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The Washington Supreme Court’s recent en banc decision in Pacific Lutheran University et al. v. Certain Underwriters At Lloyd’s London et al. looked to the broad language of the forum selection clause in the governing insurance policies in upholding the policyholders’ rights to select the forum for their coverage suit.

In Pacific Lutheran, 60 higher education institutions (the “Colleges”) filed suit in the Superior Court for Pierce County, Washington, against 16 insurers (the “Insurers”) that issued all risk insurance policies to the Colleges through the Educational & Institutional Insurance Administrators Inc. (“EIIA”), a risk retention group.  The Colleges brought suit to recover losses incurred as a consequence of the COVID-19 pandemic.  The Colleges selected the Washington state court based on the forum selection provisions contained in their insurance policies.  In particular, the Colleges relied on the policies’ “suit against the company” clause, which expressly allowed the Colleges to file suit “in any court of competent jurisdiction.”  The suit sought breach of contract damages and a declaration that the Colleges’ COVID-related losses are covered under the policies. 

Hunton Andrews Kurth’s 300-lawyer cross-disciplinary Retail Industry Team has released its annual 2023 Retail Industry Year in Review. The Review discusses retail industry issues that implicate multiple legal practice areas and highlights new and emerging risks retailers may encounter in the year ahead.

Significant issues from 2023, with insurance implications that will continue to evolve in 2024 and beyond, include copyright infringement claims for retailers engaged in social media and polyfluoroalkyl substances (PFAS) related liability claims and related putative class action lawsuits.

We discuss these risks in the 2023 Retail Industry Year in Review and on our insurance recovery blog, along with other risks that will continue to affect the retail industry in 2024.

Last week, a California federal judge held that a D&O liability insurer must advance subpoena-related defense costs on behalf of two former biotech directors and officers after the insurer could not provide conclusive evidence that the subpoenas alleged actual wrongdoing by the individuals after the company’s merger, as required to trigger the policy’s “Change in Control” exclusion. See AmTrust Int’l Underwriters DAC, Plaintiff, v. 180 Life Sciences Corp., et al., N.D. Cal. No. 22-CV-03844-BLF, 2024 WL 557724 (N.D. Cal. Feb. 12, 2024). The decision highlights the interplay of two significant D&O coverage issues—government investigations and M&A transactions—and underscores why policyholders must pay close attention to how their liability insurance policies may be impacted by a merger, acquisition, asset sale or similar deal.

While America was tuned into the big game, one California insurance broker faced its own treacherous showdown in the form of a putative class action filed on February 8, 2024 stemming from a data breach. With cyber incidents still on the rise, this is a story we know all too well: an unauthorized third party gains access to personally identifiable information, the company eventually detects the threat actor and leadership must decide how to respond. Once notifications to the public go out, the individuals impacted often file suit to recover for their alleged harm.

D&O, E&O, and other professional liability insurers often raise the insurability, or rather “uninsurability” loss defense. Consistent with our prior analysis of the ways the Ohio district court erred in assessing insurability, the Sixth Circuit’s recent decision in Huntington National Bank v. AIG outlines how courts should evaluate insurability defenses, particularly in the absence of public policy rendering a loss uninsurable.

It is not just your imagination:  verdicts are getting bigger.  So-called “nuclear verdicts” have increased in size and frequency over the past decade, particularly after the COVID-19 pandemic.  Litigation risk insurance is a little known, but highly effective, option meant to compliment traditional insurance products and provide additional protection for policyholders nervous about litigation exposure.

On February 7, the Emory Public Interest Committee (EPIC) honored insurance coverage partner Lawrence (Larry) J. Bracken II with their 2024 Lifetime Commitment to Public Service Award at the annual EPIC Inspiration Awards. As one of the Emory University School of Law’s signature events, the Inspiration Awards celebrate members of the community who do extraordinary work in the public interest and provide funding for public interest summer jobs.

We are pleased to announce that Hunton Andrews Kurth LLP insurance coverage partner Andrea DeField was named to the South Florida Business Journal’s 2024 list of Influential Business Women. The award celebrates 25 women who have a strong record of leadership, performance and innovation in their industry, as well as meaningful community involvement. This distinction is well-deserved given Andi’s leadership in the cyber insurance space, contribution to the firm’s pro bono efforts, and longstanding record of community involvement in South Florida.

Andi and the other ...