Thursday, 27 March 2008

Exhaustion Trigger Language

I can't think of any other context than insurance policy wording where the two words "exhaustion" and "trigger" would come together.

Thanks to a tip from John McCarrick of Edward Angell Palmer & Dodge (a founding father of PLUS and a good friend to Advisen), Kevin LaCroix explained the significance of the ruling by California's intermediate appellate court on March 25th which found that Qualcomm could not collect on its excess Directors & Officers (D&O) policy where it had settled with the primary carrier for less than the full limit.

See the D&O Diary post here.

Without blaming any party or any type of industry player in general, Kevin noted that the product needs improvement in order to prevent an insured getting "stuck" and noted how "many excess D&O carriers now offer exhaustion trigger language that reduces the restrictions on the kinds of payments that could trigger the excess carrier's payment obligation."

Advisen's database of over 400 D&O policy forms enables a full comparison of which policies offer this trigger language and we will be conducting a study on the topic for our subscribers. For information about this, contact me on

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