FDIC Confirms that Fully Understanding the Limitations of D&O Coverage is Critical


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FDIC Confirms that Fully Understanding the Limitations of D&O Coverage is Critical

  1. 1. B A NK INS URA NCE UPDATE FDIC Confirms that Fully Understanding the Limitations of D&O Coverage Is Critical On October 10, 2013, the FDIC issued an Advisory Statement (FIL-47-2013) regarding Director and Officer Liability Insurance Policies, Exclusions, and Indemnification for Civil Money Penalties. In summary, the advisory discusses the importance of thoroughly reviewing and understanding the risks associated with coverage exclusions contained in D&O liability insurance policies. (The full statement can be viewed here.) HIGHLIGHTS FROM THE STATEMENT “In recent years, the FDIC has noted an increase in exclusionary terms or provisions contained in depository institutions’ D&O insurance policies that may adversely affect the recruitment and retention of well-qualified individuals. When such exclusions apply, directors and officers may not have insurance coverage and may be personally liable for damages arising out of civil suits relating to their decisions and actions.” “D&O liability insurance is an important risk mitigation tool for financial institutions, and it is vital for directors and senior executives to fully understand the protections and limitations provided by such policies.” SO, WHAT IS THE BEST COURSE OF ACTION YOU CAN TAKE TODAY? © Copyright 2013. CBIZ, Inc. NYSE Listed: CBZ. All rights reserved. “The FDIC urges each board member and executive officer to fully understand the answers to the following questions regarding D&O insurance coverage, especially when considering renewals and amendments of existing policies: • hat protections do I want from my institution’s W DO policy? • hat exclusions exist in my institution’s DO policy? W • re any of the exclusions new, and if so, how do they A change my coverage? • hat is my potential personal financial exposure W arising from each policy exclusion?” CBIZ AIA CBIZ AiA can help! We are offering our proprietary, comprehensive Policy Analysis to any community bank for FREE until January 15, 2014. Normally reserved for clients, the Policy Analysis incorporates a review of all language in the bank’s current policies – not just a review of endorsements. Language embedded within a policy can expose a bank to under-insured or uninsured risk, so we carefully review this language with an emphasis on inclusions, exclusions and definitions. The bank’s policy limits will also be compared against banking industry benchmarks. When you partner with CBIZ AiA’s unparalleled team of professionals, you benefit from a unique combination of expertise – ex-bankers with nearly 70 years of banking experience and bank insurance specialists with over 20 years of experience insuring all sizes of financial institutions. Confused about Civil Money Penalties and insurance coverage? Are they the same as a regulatory lawsuit? We’re happy to answer any questions you have. Contact Kris St. Martin today to get your FREE Policy Review started. 763.549.2267 • kstmartin@cbiz.com