This fall, the pop culture poster child for greed, Gordon Gekko,returns in a sequel to the movie "Wall Street," called "Money NeverSleeps." While Gordon Gekko may be fictional, in reality executivesmay find themselves sharing their directors and officers liabilityinsurance coverage with someone who, like Gekko, believes that"greed is good."

Recent economic crises and the surfacing of massive frauds andPonzi schemes have forced directors and officers to watch out forthemselves to a degree that they never have before. Concern overthe other guy's greed is increasingly justified, as it poses a realthreat.

Protecting innocent executives from the behavior of others hasbecome imperative for risk managers, their brokers and insurancecarriers.

In the context of public company D&O insurance, beyondtraditional concerns like capacity and the breadth of coverage,insured directors and officers are asking about how innocentinsureds can protect their coverage from the behavior ofothers.

Over the last decade, the D&O insurance industry has beenfine-tuning coverage protections for innocent insureds from thenot-so-innocent knowledge and acts of others–such as applicationand exclusion severability, and partial or completenon-rescindability.

Those solutions have evolved and generally address the concernsthey are designed to address fairly well.

For example, application severability is generally intended torespond to the potential loss of coverage from knowledge orinformation a co-insured has that is material to the risk insuredand that has been withheld from or misstated to the carrier.

While it seems like there are more forms of applicationseverability than trees on the planet, the concept has been sorefined over the last 10 years that very few policies lack asuitable form of response to this exposure.

Likewise, exclusion severability has evolved over time andshould be readily available in an acceptable form.

Nevertheless, there are still opportunities for carriers toavoid coverage for some or all insureds due to the behavior of justone "black hat" insured.

To help insureds consider how their D&O coverage protectsthem from the other guy's greed, here are two key questions toconsider in reviewing D&O coverage.

1) If I cooperate with my carrier in responding to aclaim, but a co-insured does not, will I havecoverage?

Too often, the answer will be a resounding "no!"

Nearly every D&O insurance policy contains a cooperationclause. If breached, an insurer may properly disclaim coverage forall insureds, not just the offending, uncooperative insured.

One theory behind the broad application of this provision may bethat, for cooperation, each insured is their brother's keeper–thatis, insureds are more likely to induce the other insureds tocooperate than the carrier or policy terms could on their own.

Problems can arise, however, when current and former directorsor officers are co-defendants but do not share common defensestrategies, or when one or more insureds have already lost theircoverage. In those cases, there may be compelling incentives forinsureds not to cooperate with each other and the carrier.

With the Securities and Exchange Commission, the Department ofJustice and other enforcement bodies seeking to improve prosecutionsuccess through whistleblowers, these incentives are more prevalenttoday than ever before.

One simple solution is to ask for claims cooperationseverability in your D&O policy. That way, each insuredperson's cooperation compliance will be judged solely on thatinsured's behavior.

2) Could my policy's insured vs. insured exclusion leaveme without coverage due to another insured person'sbehavior?

In most cases the answer–unfortunately for the insured–will be"yes." Certainly, if an insured person is a plaintiff, most D&Oforms would exclude coverage for all insureds. The "insured vs.insured" exclusion typically precludes coverage for claims by or onbehalf of entity insureds and insured persons against otherinsureds.

Like severability, the insured vs. insured exclusion evolvedthrough the addition of numerous exceptions that are routinelytweaked to provide coverage that might otherwise be precluded. As aresult, the exclusion wording is often lengthy and complex, andstill it fails to afford the needed comfort that an individual'scoverage will survive the bad behavior of co-insureds.

The "D&O Diary Blog" by Kevin LaCroix, in a Sept. 26, 2006entry titled "Fastow's Sentence, Future Civil Litigation, andD&O Insurance" (http://bit.ly/d85fmS), suggested that "acriminal defendant's offer to exchange information for leniencysupport may be a poisoned chalice for civil plaintiffs' attorneys[and, perhaps co-defendants, too], because accepting it and usingthe information against other directors and officers couldpotentially have the effect of precluding D&O insurancecoverage."

Fortunately for public company insureds, solutions to this issuehave been recently introduced into the market. Two in particularmay be requested:

o Have your policy's insured vs. insured exclusion replaced withan entity vs. insured exclusion.

o Secure a policy in which the exclusion provides an exceptionfor non-indemnifiable defense costs to ensure that in theworst-case scenario, where there is no right to indemnification,insured persons can still defend themselves.

Also, be mindful that the entity vs. insured exclusion withoutclaims cooperation severability may prove ineffectual, since aninsurer might assert that one insured suing another breaches thepolicy's requirement of full cooperation.

These features provide real value in their protection ofinnocent insureds, and the difference in results can be profound.Naturally, carriers may require additional premium to offset theadditional exposure assumed.

Insureds may not be able to choose or know of everyone whoshares their D&O coverage, but coverage can be tweaked toensure that if they find themselves sharing with someone likeGordon Gekko, it will still be available to them despite Gordon'santics.

Robert Yellen is the chief underwriting officerof the Executive Liability Division of Chartis.