Five years ago on July 21 President Obama signed the Dodd-Frank law and to mark the occasion, journalists and politicians have predictably been either bashing or lauding the still controversial overhaul of Wall Street.
There were many supposed insurance implications of the legislation: insurance oversight, solvency requirements, surplus lines regulation and reinsurance. Additionally, some prognosticators said the law would impact the directors and officers liability market, especially when it came to financial institutions—the target of the law, written as part of the fallout of the financial crisis.
This week, reports indicated the reform hasn’t effected the D&O landscape for financial institutions.
Debate over the law’s impact continues to rage and I’m not about to join in but in light of the anniversary I placed an order to our data analysts to look at D&O cases over time for financial institutions and, according to Advisen’s Loss Insight database, the case count jumped from 168 in 2010 to 312 in 2011—the first full year after the signing of the law.
In fact, as you can see, the amount of financial-institution D&O cases after the Dodd-Frank law was signed has remained considerably higher than pre Dodd-Frank years. Even a fall in cases in 2014 to 268 is still 100 more than 2010.
This may be—probably is—a coincidence. At the very least, this picture still does not mean the Dodd-Frank Act had such a stark effect on cases. This chart includes 15 types of cases (listed in order of most case types to least): negligence, capital regulatory action, securities class action, merger objection, derivative shareholder action, antitrust, securities individual actions, price fixing, billing fraud, Office of Foreign Asset Control violations, breach of fiduciary duties: securities, breach of fiduciary duties: business, banking, market manipulation and fraudulent trade practices.
Not all of these types of cases would derive from some kind of Dodd-Frank faux pas. The increase in cases could also have less to do directly with Dodd-Frank and more to do with an overall attitude toward the industry following the financial crisis. It’s probably not going out on a limb to say there has been more scrutiny on—and possibly more anger directed toward—financial institutions. And when we get angry, we sue.
So, results are inconclusive. But that was still fun, wasn’t it?
