Simon Glairy is a prominent figure in the insurance landscape, recognized for his deep expertise in professional liability and the complex mechanics of multi-layered coverage towers. With a career dedicated to deciphering the intersection of corporate risk and policy language, he has become a go-to authority on how “claims-made” structures react to large-scale financial litigation. In this discussion, he provides a sophisticated look at the high-stakes battle between a group of major insurers and a banking giant over a $240 million settlement. The conversation explores the critical importance of claim timing, the legal definitions of “Damages,” and the long-term impact of a single line of text in a decade-old notice.
How does the “claims-made” principle create such a high-stakes environment when multiple lawsuits span several years, as seen in the SunTrust litigation?
In the world of professional liability, the “claims-made” principle is the bedrock that determines which policy year must shoulder the burden of a loss. For the $120 million “Tower 2” coverage—which consists of a primary policy and ten excess layers for the period of October 1, 2009, to October 1, 2010—the timing of the Bickerstaff suit in July 2010 appears to fit perfectly within the window. However, the insurers, including heavyweights like AXA XL, Chubb, Travelers, AXIS, and Twin City Fire, are challenging this by pointing to a “relatedness” clause. They argue that because this suit shares a logical and causal connection with earlier class actions like Peterson and Buffington from 2008, it actually belongs to a previous policy period. When you have $240 million on the line, the difference between a claim being “new” or “related” is not just a legal technicality; it is the difference between a full payout and zero coverage.
What are the long-term consequences of a single line in a claim notice, and how does the bank’s change in strategy years later impact this legal battle?
The power of a single sentence in a 2010 notice cannot be overstated, as it serves as a foundational piece of evidence in the carriers’ suit filed on June 26, 2026. Back in 2010, when the bank first reported the Bickerstaff case, they allegedly described it as inter-related to the Peterson class action, which effectively tied it to the 2008-2009 “Tower 1” period. It wasn’t until May 25, 2021, that the bank, now operating as Truist after a 2019 merger, attempted to reverse course and re-characterize the claim to trigger the Tower 2 limits. This fifteen-year gap between the initial filing and the final settlement of $240 million creates a massive trail of documentation that insurers are now using to highlight inconsistencies. For claims professionals, this illustrates that an admission made in the heat of early litigation can come back to haunt a company’s recovery efforts over a decade later.
Beyond the timing of the claim, the carriers are challenging the definition of “Damages” itself; what makes this distinction between fees and losses so critical for professional services?
This is a sophisticated defense strategy because it argues that even if the timing were correct, the money paid out is fundamentally uninsurable. The policies in question often exclude “fees, commissions, or charges” that are paid to an insured for professional services or lending acts. Since the $240 million settlement was calculated based on overdraft fees that customers had already paid to the bank, the insurers contend that returning that money is a restitution of fees rather than a covered “Loss.” To make their case even stronger, the insurers are citing the bank’s own historical arguments where they claimed these overdraft fees were “reasonable charges” for services rendered. It is a classic trap: if the bank successfully argued to regulators that the money was a fee for service, they essentially handed the insurers a map to exclude that same money from coverage under the “Damages” definition.
The underlying case involved fifteen years of litigation regarding how transactions were ordered; how does this specific banking practice influence the “relatedness” of these claims?
The core of the dispute involves the bank allegedly ordering transactions from largest to smallest to maximize the number of overdraft fees triggered. Because the Peterson, Buffington, and Bickerstaff suits all centered on this specific high-to-low sequencing, the insurers have a very strong “fact and circumstance” argument to bundle them together. In professional liability, once a “fact, circumstance, situation, transaction or event” is established as the root cause of multiple claims, the clock usually stops at the first occurrence. The carriers are betting that the court will see this fifteen-year saga as one continuous event that began in 2008, thereby insulating the 2009-2010 Tower 2 policies from any liability. This reinforces the idea that for complex financial institutions, a systemic operational choice can create a “long tail” of liability that spans multiple years but only triggers a single policy’s limits.
What is your forecast for professional liability underwriting following this $240 million dispute?
I expect we will see a significant tightening of “Related Acts” language and much more explicit exclusions regarding the disgorgement of fees. Carriers are clearly frustrated with being asked to “refund” a client’s own service charges, and this case will likely lead to policies that more clearly distinguish between a compensatory award for negligence and a simple return of unearned fee income. We are moving toward an era where the definition of “Damages” will be as heavily scrutinized during the underwriting process as the limit of liability itself. Risk managers at large financial institutions will need to be much more careful about how they describe their fee structures in public filings, as those descriptions are now being used as primary evidence to deny insurance coverage in nine-figure settlements.
