Jenner & Block

"Delaware Supreme Court Upholds Coverage for Civil Class Action Settlements, Rejecting Claim that Payments Represent Uninsurable Disgorgements"

In the recent decision of In re: TIAA-CREF Insurance Appeals, Nos. 478, 2017, 479, 2017, 480, 2017, 481, 2017, 2018 WL 3620873 (Del. July 30, 2018), the Supreme Court of Delaware unanimously held that settlement payments made in connection with civil ERISA class actions are insurable losses.  In TIAA, the policyholder argued it was entitled to coverage for its defense costs and settlement payments under several layers of primary and excess liability coverage.  The insurers, on the other hand, argued that the settlement payments were disgorgements, which were uninsurable under New York law and public policy.  The Supreme Court of Delaware, applying but distinguishing New York law, sided with the policyholder and held that the settlement payments and defense costs were covered losses under the policies.

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