BHSI Launches Preferred Counsel Program to Enhance Securities Class Action Defense
Berkshire Hathaway Specialty Insurance (BHSI) has launched a Preferred Counsel Program designed to guide insured directors and officers (D&O) towards top-tier legal representation in securities class actions. Securities class actions remain a significant risk for U.S. public companies, with hundreds of filings each year and settlements frequently reaching into the tens or hundreds of millions of dollars.
The program selects 25 law firms noted for their expertise in securities litigation, combining legal proficiency with commercial practicality to optimize defense outcomes.
In 2024, 220 securities class actions alleging violations of federal securities laws were filed, marking a slight increase over prior years. Claimed damages rose 23 percent, with several lawsuits alleging damages exceeding $5 billion, contributing to cumulative settlements surpassing $6 billion. Amid increasing financial exposure, effective legal defense is crucial to minimizing losses and preserving insurance capital.
BHSI's Preferred Counsel Program offers financial incentives to insureds selecting counsel from its vetted firm list, including immediate reductions in self-insured retention (SIR) amounts and potential further reductions up to 100 percent if a motion to dismiss is unsuccessful and the case proceeds to costly discovery. These incentives are unique in the D&O insurance marketplace and aim to balance cost control with access to high-caliber legal expertise.
The program recognizes that early dismissal motions are critical, with roughly half of cases surviving motions to dismiss and entering resource-intensive discovery phases. Consequently, selecting counsel with proven success across both litigation stages improves the insured's position.
BHSI stresses the importance of firms that effectively manage cases toward resolution while engaging in rigorous defense.
Beyond financial benefits, BHSI fosters close collaboration between its claims professionals and preferred counsel. This partnership facilitates more efficient claims handling, particularly during settlement negotiations, benefiting both insured clients and insurers. The program is designed to maintain flexibility, allowing insureds to choose from the preferred list or other counsel and to litigate in any U.S. jurisdiction.
Since its inception in 2024, the Preferred Counsel Program has contributed to BHSI's growth in the primary public D&O insurance segment by over 20 percent. This growth underscores market receptivity to insurer-led initiatives that align legal defense quality with risk management and underwriting objectives.
BHSI operates under the Berkshire Hathaway National Indemnity group, carrying strong financial ratings including A++ from AM Best and AA+ from Standard & Poor’s. Its specialty insurance offerings span commercial property, casualty, healthcare professional liability, executive lines, and more, supporting diverse industry segments across multiple regions.
The Preferred Counsel Program exemplifies evolving risk mitigation strategies by integrating legal vetting, financial incentives, and claims underwriting expertise. By streamlining legal defense selection and fostering insurer-law firm collaboration, BHSI aims to mitigate the complex challenges posed by securities litigation exposure in the U.S. public company market.