Media Coverage
Source: Law360
Media Coverage
05.02.13
Peter Gillon, a Washington, D.C.-based partner in Pillsbury’s insurance recovery and advisory practice, discussed whether financial firms being investigated by the Consumer Financial Protection Bureau would be covered by their insurance policies.
Insurance against CFPB investigations and enforcement actions is likely to fall under D&O or E&O policies, Gillon explained. However, because the CFPB opened its doors in July 2011 and has only been able to bring enforcement actions since January 2012, the insurance coverage issues for both types of policies have yet to be explored.
“The insurance market follows the legal market, usually a couple of steps behind,” he said. “The reason is that the insurance market is reactionary.”
Gillon suggested that insurers might be more likely to cover CFPB actions now, when the agency is new, than later as they figure out what lines they want to draw and what types of claims they want to deny. “Insurers will tend to modify their policies to clarify that coverage does or doesn't exist, and offer additional coverage for a fee.”
Rather than waiting for courts to determine coverage, Gillon recommended that companies review their D&O policies closely now, as the CFPB gears up its enforcement actions.