‘Turbulent’ time, uncertainty for D&O litigation after Trump dismantles regulations

By Chad Hemenway on September 14, 2017

NEW YORK — President Trump’s push to greatly reduce federal regulation will not reduce litigation, according to experts speaking here at Advisen’s Executive Risk Insights Conference on September 13.

Trump’s commitment since taking office to eliminate 80 percent of federal regulations has created a “false sense of security” for directors and officers, said Paul Schiavone, regional head of financial lines and liability for North America at Allianz.

Schiavone said the Trump administration’s withdrawal or suspension of hundreds of pending regulations creates uncertainty for executives.

“This will not lower [D&O] claims,” he said. In fact, Schiavone said, 2017 has been “the most turbulent year ever” for litigation, and he predicts the trend will get worse rather than better.

“Defense fees have skyrocketed,” Schiavone added. “That’s the biggest challenge. These [issues related to securities litigation] are complicated matters.”

Not only has the plaintiffs’ bar remained active, but litigation filed by activist shareholders–a global phenomenon–has become and will continue to remain a huge risk to company directors, said Schiavone.

“They think, ‘If the government is not going to change things, I will,'” he explained.

The possible reduction in federal litigation due to the removal of federal regulations may have removed the most predictable type of lawsuit. Litigation related to state regulation, as well as private rights of action, remain problems, as both can be more problematic in terms of costs, according to panelists.


This story in an excerpt of the original. The content originally appeared in Professional Front Page News.
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Chad Hemenway is Managing Editor of Advisen News. He has more than 15 years of journalist experience at a variety of online, daily, and weekly publications. He has covered P&C insurance news since 2007, and he has experience writing about all P&C lines as well as regulation and litigation. Chad won a Jesse H. Neal Award for Best Single Article in 2014 for his coverage of the insurance implications of traumatic brain injuries and Best News Coverage in 2013 for coverage of Superstorm Sandy. Contact Chad at 212.897.4824 or [email protected].