Del. Supreme Court Holds Settlement Amounts Not Uninsurable Disgorgement

A coverage defense that insurers frequently raise is the assertion that the amount for which the insurance payment is sought represents uninsurable disgorgement. Beyond the more general question of whether or not disgorgements are or are not insurable is the more specific question of whether or not the amount for which coverage sought represents disgorgement. In an interesting July 30, 2018 opinion in a case involving the investment firm TIAA-CREF, the Delaware Supreme Court, applying New York law, rejected the firm’s insurer’s argument that the amount the firm paid in settlement of three underlying class action lawsuits represented uninsurable disgorgement. The Court expressly distinguished a series of three decisions in which New York courts had ruled that settlement amounts paid in settlement of regulatory enforcement actions represented uninsurable disgorgement. The Delaware Supreme Court’s July 30, 2018 order can be found here.   Background TIAA-CREF…

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