Claims Handling Across Borders: Coordinating Defense Counsel and Insurer Responses in Directors and Officers (D&O) Liability Insurance Cases

Directors and Officers (D&O) claims that cross U.S. borders — whether between states (e.g., Delaware vs. California) or between the U.S. and foreign jurisdictions — create acute operational, coverage, and cost issues for insurers and insureds. For U.S.-focused multinationals and Delaware‑incorporated companies with operations in New York, California, Texas or Illinois, coordinated defense strategy is essential to protect executives, preserve coverage, and manage litigation spend.

This article explains practical steps for coordinating defense counsel and insurer responses, identifies common pitfalls, and gives actionable guidance for in-house counsel, risk managers, and brokers operating in the U.S. market.

Why cross‑border D&O claims are uniquely challenging

• Jurisdictional differences — Service rules, discovery scope, and remedies vary sharply between Delaware chancery practice, New York state/court litigation, California consumer and employment regulation, and international forums.
• Choice of counsel tension — Local plaintiff counsel may demand local defense counsel for jurisdictional strategy; insurers often prefer panel counsel to control costs.
• Conflicts and coverage allocation — Insurer reservation of rights letters, duty to defend vs. indemnify, and allocation of loss across covered and uncovered matters become more complicated across multiple legal regimes.
• Enforcement and judgments — A U.S. judgment may be difficult to enforce overseas, while a foreign judgment can trigger novel enforcement defenses (e.g., public policy, sanctions).
• Regulatory and sanctions exposure — U.S. sanctions, tax, or insolvency laws can create exclusions or limit payments across borders.

Early steps: notification, triage, and jurisdictional mapping

1. Immediate notification — Ensure prompt notice to the insurer under all relevant local policies (master program and any local buys). Time is critical in preserving coverage and defense cooperation.
2. Triage the claim — Determine the forum(s), plaintiff(s), relief sought, and any regulatory components (SEC, DOJ, OFAC).
3. Map policies and limits — Identify master policy wording, local policies, local law distinctions, and reinsurance/treaty issues that might affect coverage or capacity.
4. Identify potential conflicts — Note any cross‑claims or company‑level exposures that could create insurer/insured conflicts.

Coordinating defense counsel: structure and best practices

Harmonizing counsel selection and litigation strategy across jurisdictions is the single most important operational task.

Panel counsel vs. local counsel

• Panel (insurer‑appointed) counsel
  • Pros: cost control, consistent strategy, insurer familiarity with policy terms.
  • Cons: may lack local procedural nuance; perceived conflict by insureds.
• Local counsel (insurer‑approved or insured‑appointed)
  • Pros: local court experience, faster procedural navigation (e.g., emergency relief in California).
  • Cons: potential cost divergence; need for clear protocol on strategy alignment.

Use a hybrid model: insurer appoints lead panel counsel for central strategy and settlement authority, while local counsel addresses jurisdictional procedural work and supports depositions, witness prep, and discovery locally.

Selection, approvals, and fee protocols

• Maintain a pre‑approved roster of local firms by jurisdiction (New York, Delaware, California, Texas, Illinois) with agreed hourly rates and staffing guidelines.
• Use written engagement letters that define: who controls settlement authority, reporting cadence, billing guidelines (task‑based or blended rates), and e‑billing requirements.
• Require immediate escalation to coverage counsel if conflicts arise, with an agreed process for appointing independent counsel where the insurer’s interests diverge from the insured’s.

Coverage strategy: insurer tactics and insured protections

• Reservation of rights — Expect reservation of rights letters. Insureds should respond promptly, request defense counsel that will also coordinate coverage analysis, and negotiate tolling agreements if possible.
• Coverage counsel — Appoint separate coverage counsel where insurer and insured interests diverge or where coverage issues (e.g., sanctions, insolvency exclusions) are complex.
• Allocation protocols — For mixed covered/uncovered claims, negotiate an allocation methodology (time/effort, claims‑by‑claim) and, if necessary, request arbitration or mediation provisions in the policy.

Managing multi‑jurisdiction litigation lifecycle

• Immediate steps: preservation letters, litigation hold, local subpoenas for witnesses, emergency motions, and coordination calls between lead counsel, local counsel, insurer claims, and coverage counsel.
• Discovery coordination: negotiate targeted 30(b)(6) topics, agreed ESI protocols, and cross‑border data transfer mechanisms (privacy, GDPR implications if EU data implicated).
• Settlement/consent to settle: Insureds commonly require insurer consent for settlements exceeding a defined threshold. Ensure consent provisions are clear and tied to the policy’s settlement clause; consider insisting on pre‑approved settlement authority for routine claims under agreed limits.

Pricing and market context (U.S. market, 2024)

D&O pricing varies widely by company size, industry, and claims history. Below are approximate U.S. market ranges (industry sources cited) to help budget cross‑border coordination costs and defense spend.

Sources: Marsh and Aon market reports indicating elevated pricing and volatility for D&O in 2021–2024; insurer small‑business product pages for retail pricing guidance. See Marsh market commentary and Aon D&O market insights for current trends:

• Marsh: https://www.marsh.com/
• Aon: https://www.aon.com/
• Hiscox (small business D&O): https://www.hiscox.com/small-business-insurance/directors-and-officers-insurance

Example insurers and indicative positioning (U.S.)

• Hiscox — focuses on small businesses; online quoting and simpler forms; illustrative small‑biz premiums often start in the low thousands for basic $1M limits (see Hiscox small business D&O).
• Chubb / AIG / Travelers / Beazley — market leaders for mid‑market to large accounts; capacity and multinational program expertise; pricing depends heavily on sector and limits.
• Specialty carriers (e.g., Beazley) — often used for complex financial institutions and tech IPOs; higher premiums but deeper expertise on cross‑border investigations.

(Links above provide entry points to carrier product pages and market commentary.)

Table: Local Buy vs Global Master Program vs Hybrid (practical comparison)

See also detailed program considerations in Policy Language for Global Programs: Harmonizing Local and Master Directors and Officers (D&O) Liability Insurance Forms and operational impacts in Jurisdiction, Service of Process and Enforcement: Practical Impacts on Directors and Officers (D&O) Liability Insurance.

Practical checklist for U.S. multinationals (NY / DE / CA focus)

• Pre‑approve panel and local counsel in New York, Delaware, California, Texas, Illinois.
• Maintain a clear master/local policy matrix and claims notification map.
• Negotiate express allocation and consent‑to‑settle procedures before filings.
• Implement e‑billing and monthly claims dashboards for transparency.
• Establish coverage counsel triggers and escalation paths.
• Conduct annual D&O program reviews and tabletop exercises for cross‑border claims.

For broader program structuring guidance, review How to Structure a Multinational D&O Program: Local Buy vs Global Master Policy Options and the checklist for expansion in Checklist for Expanding Abroad: Insurance and Compliance Steps for Directors and Officers (D&O) Liability Insurance in New Markets.

Conclusion

Cross‑border D&O claims require fast, coordinated decision making across defense counsel, coverage counsel, insurers, and insureds. For U.S.-based multinationals — especially those incorporated in Delaware or litigated in New York and California — the right upfront program design (panel + local counsel, clear allocation protocols, and well‑defined consent procedures) reduces risk, limits surprises, and preserves coverage. Use pre‑approved counsel rosters, documented billing and settlement authorities, and regular program reviews to keep cross‑border exposures manageable and litigation strategies aligned.

External references for market context and pricing:

• Marsh market insights: https://www.marsh.com/
• Aon D&O market commentary: https://www.aon.com/
• Hiscox small business D&O product: https://www.hiscox.com/small-business-insurance/directors-and-officers-insurance