Advisen Transaction™ Insurance Insights Conference Examines Life of Complex Deal from Inception to Potential Claims and Dispute Resolution under a Reps & Warranties Insurance Policy

May 14, 2018 – Butler Rubin partner Jason Dubner offered these takeaways after attending Advisen’s Transaction™ Insurance Insights Conference held at New York Law School on April 26, 2018:

  • There was considerable discussion about the growth of the transaction insurance industry over the last 10 years, particularly with reference to the conference expanding from just a few attendees in one law firm’s office to more than 200 participants at this year’s program at NYLS.
  • An investment banker on the “Marketing Considerations” panel indicated that it is now to the point where he assumes that a reps & warranties policy will be part of the eventual deal, and that buyers will know that it should be included in their bid without him asking for it.
  • The panel on “Due Diligence & Underwriting” discussed the increasing insurance of deals involving unaudited financial statements, as well as deals with no seller indemnity (with one panel member questioning whether it is really that much riskier than if the seller had agreed to hold back 0.5%).
  • The “Negotiating Insurance Coverage” panel included a broker who suggested that insurers should manage their lawyers more through this phase of the deal, limiting the negotiation to only those “truly important issues.” The panel also discussed the importance of providing explanations for proposed exclusions.
  • The “Claims” panel emphasized the need for the insureds to voluntarily provide documents focusing on the “real issue” regarding the claim in order to expedite the process; the panel also emphasized the need to look at the nature of the loss and determine whether it is recurring/non-recurring before asserting that a multiple of damages might be appropriate; in general, the panel noted the growth of tax-related claims, and the need for brokers to manage policy-holder expectations.
  • The “Dispute Resolution” panel reported the results of an informal survey, which found very few mediated or arbitrated disputes; they also recommended that lawyers engage in more discussions with their clients about the nature of the alternative dispute resolution provisions in their policies ex ante, including by suggesting the use of provisions requiring mediation to be followed by litigation if the dispute remains unresolved.
  • The “Reinsurer’s View” panel emphasized the need to underwrite the underwriter rather than the risk, and that they currently view tax/contingent liability deals as more problematic than reps & warranties insurance deals.