Scott Seaman Discusses Significance of Fourth Circuit's Towers Watson Bump-Up Exclusion Ruling

Scott Seaman, Chicago-based partner and Co-Chair of Hinshaw's Insurance Services Group, was quoted in a recent Law360 Insurance Authority story analyzing the Fourth Circuit’s decision in Towers Watson & Co. v. National Union Fire Insurance Co. of Pittsburgh, Pa. et al. This case was closely watched because it involves the application of the "bump-up" exclusion in directors and officers (D&O) insurance policies, which Seaman has also commented on in several recent news stories.

The court affirmed that Towers Watson was not entitled to coverage for settlements arising from shareholder litigation related to its 2016 merger, finding that the settlements triggered the bump-up exclusion—a provision that precludes coverage for insurance claims alleging inadequate deal consideration.

Seaman described the Fourth Circuit’s decision as "well-reasoned and in full accord with the law and language of the exclusion," noting that the court "properly ‘pumped up’ the bump-up exclusion." He further observed that "[a]lthough Virginia is not exactly the leading situs for [mergers and acquisitions] or coverage litigation, the approach taken by the Fourth Circuit is consistent with the approach taken under many states' laws."

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• Law360 Insurance Authority: "4th Circ. Towers Watson Ruling Not Final Word On Bump-Ups" (June 5, 2025)