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Insurer must cover D&O arbitration defense costs, but split uncertain - Business Insurance Skip to content Register for free Search Search Log In Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Insurer must cover D&O arbitration defense costs, but split uncertain by Richard Sine Coverage Disputes , D&O , P/C Insurers Ironshore Inc. , Liberty Mutual Aug 11, 2026 A Liberty Mutual excess insurer must cover a securities firm’s defense costs in an arbitration brought by a rival brokerage, a Delaware court ruled, invoking a relatively recent legal concept in directors and officers coverage allocation disputes. The underlying dispute in StoneX Group, Inc. v. XL Specialty Insurance Company involved two employees who resigned from brokerage and investment firm BTIG to join New York-based StoneX. San Francisco-based BTIG accused the employees of leaking confidential information and violating restrictive covenants. The parties settled in 2021, but the dispute resurfaced two years later, resulting in two separate arbitrations. Minneapolis-based Ironshore Indemnity, the excess insurer, argued the second arbitration was really a continuation of the earlier dispute, meaning coverage would fall to an earlier policy period for which Ironshore provided no excess coverage. Judge Patricia A. Winston of the Superior Court of Delaware disagreed. The “interrelated claims” provision of the 2021 policy would only apply if the matter qualified as an “Employment Practices Wrongful Act” under the policy, Judge Winston wrote. It did not, because that category only covered disputes brought by employees against their employers, such as wrongful termination, she wrote. It did not apply to disputes brought by employers against employees, such as the covenant and confidentiality matters at dispute, she wrote. With the second arbitration covered, StoneX still demanded Ironshore cover defense costs for the first arbitration, for which the settlement was uncovered. StoneX invoked the Larger Settlement Rule, which was established by Delaware Superior Court in 2021 to help resolve oft-contested cases when defense costs are shared between covered and uncovered claims and parties. The rule helps determine how much of the total defense bill an insurer must pay. Under the rule, a loss is fully recoverable unless the insurer can show that liability for uncovered conduct increased its costs. The judge found the rule applied here, since StoneX and certain employees shared lawyers whose work benefited both the covered and uncovered arbitrations. But she declined to award StoneX all of its defense costs, ruling that factual disputes remained over whether the uncovered arbitration against StoneX itself increased costs tied to the covered arbitration against its employees. 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