The role of Insurance in public policy is not usually a field I travel in. However, in the area of Directors and Officers Insurance, it is striking to me that the Insurance Carriers bear the burden of Directors' and Officers' wrongdoing, and the Directors and Officers do not. The no-admission-of-guilt settlements favored by the Securities and Exchange Commission and other Federal agencies with corporations and their directors and officers who allegedly acted badly, and even faced criminal prosecutions and penalties, bring this public role of Insurance to light.
"But these no-admission settlements can be little more than a wrist slap -- and certainly do not qualify as punishment. Most financial penalties end up being paid for by the company's shareholders or its insurance policies. That's not much of a deterrent." Gretchen Morgenson, "Fair Game / Making Them Pay (And Confess)" p. 1, col. 1 (New York Times Nat'l ed., "SundayBusiness" Section, Sunday, January 27, 2013). [Emphasis added.]
Altering the public policy of pursuing no-admission-of-guilt settlements short of going to Trial, will take more than Insurance. "It won't be easy to change the mindset at the S.E.C. from one that regularly allows defendants to avoid culpability. Most of all, pursuing a more aggressive litigation stance requires that the agency's prosecutors be ready and able to go to trial." Id. [Emphasis added.]
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