Useless Insurance – Why Do Risk Managers Buy These Policies?

An April 20, 2015 post at D&O Diary describes policy terms that essentially defeat the purpose of buying D&O coverage. One has to wonder why risk managers buy policies that say:

 “No Claims expenses shall be incurred or settlements made, contractual obligations assumed or liability admitted with respect to any claim without the insurer’s written consent, which shall not be unreasonably withheld. The insurer shall not be liable for any claims expenses, settlement, assumed obligation or admission to which it has not consented.”

 “No action shall be taken against the insurer unless, as a condition precedent thereto, there shall have been full compliance with all of the terms of the policy, and the amounts of the insureds’ obligation to pay shall finally have been determined either by judgment against the insureds after actual trial, or by written agreement of the insureds, the claimant and the insurer.”