Uncategorized

No Claim?

U$
Ailing

No Claim?

A recent US Sailing Board of Directors minutes reported that
US Sailing had spent $145,00, and counting, on the Rios-Hall litigation.
Another set of Board minutes said that the Board had approved another
action against Hall to recover these costs. That vote was 6-4-1 to seek
recovery against Hall. Hardly a mandate. And pretty clear dissension
within the Board on this topic. Sounds vindictive too.

Then, a few days ago, an Anarchist sent along this note, wondering why
US Sailing didn’t just go to their insurance carrier and make a claim
under their Directors & Officers Errors and Omissions coverage.
We wonder that too, seeing as it takes a lot of members to pay this
bill. We asked President Capron about this, but he seems to have lawyer
up. What’s that cost, and who’s getting paid?

A friend of mine who watches, but won’t participate on SA, saw this
thread and has pretty decent knowledge about insurance. He says that
the $145,000 spent on arbitration could have been filed as an insurance
claim under the Directors’ and Officers’ insurance and can’t understand
why any corporation would eat a $145,000 expense instead of transferring
that loss to the insurer. He said that he’s never had any insured eat
a 6-figure claim when they didn’t have to. He said it would be hard
to fathom why this claim would not have been paid.

So what is going on? Why hasn’t US Sailing filed an insurance claim
on this? Why isn’t this thing showing up on their books as $0? Why are
they wasting my dues and everyone else’s dues on this? Could it be that
they forgot? If they forgot, someone needs to be fired over a $145,000
loss that didn’t need to be there. And what about the fiduciary malfeasance
of the board of directors that lead to them eating this financial loss?

Update: one thing we did not consider is potentially a critically
important factor – the deductible. For example, a company’s insurance
policy deductible might be $300,000, which is about average for a mid-sized
policy (with a loss limit is $3M). D&O/E&O is really a backstop
against a firm killing loss, it is not meant to pick up the expense
of small time litigation (and in the world of legal fees, 145k is chump
change), which could explain the lack of an insurance claim.)