Axis Insurance Loss Poses Rare Question About Director Fraud

A clash between a payment technology company and an AXIS Capital Holdings Ltd. insurance unit over legal defense payments is teed up for a rare trial that will highlight executives’ knowledge of potential fraud.

A federal judge in Pennsylvania last week reaffirmed her decision calling for a jury to assess what Cantaloupe Inc.'s leaders knew about inflated sales and federal securities regulators’ probes when applying for directors and officers insurance. The court refused to rule that a widely used “prior knowledge” exclusion relieves Axis Insurance Co. of its duty to foot the bill for the payment company’s legal troubles.

The ...