Thursday, November 11, 2010 8:42:19 AM
Recently, increased proposed guidance from regulators addressing directors' duties and responsibilities to their credit unions has directors concerned regarding whether their board chair and board members would be covered, or to what extent they would be covered, in the case of future lawsuits. The California and Nevada Leagues worked with their business partner, CUNA Mutual Group, to answer some of the questions and concerns that they have received from their own credit union members
Here is a snapshot of just a few of the questions and answers provided by the California and Nevada Credit Union Leagues' President/CEO Diana Dykstra. In a letter to credit union members, she encouraged credit unions, after reading this information, to review their indemnity policy with their insurance provider and an attorney, and consider whether they may need additional coverage. To view the letter in its entirety, click here.
Q: Should I, as a board member, be more concerned about potential lawsuits than usual?
A: Yes, the overall climate for volunteer board members has grown more contentious over the last two years. In today's economic environment, we can anticipate an increased number of lawsuits against credit unions and their board members. We are witnessing a growing trend of efforts to shift legal liability to directors.
Q: What is the difference between indemnification and management liability insurance?
A: Indemnification refers to an agreement between you as an executive or director and the credit union for reimbursement of expenses related to claims against you as a result of your service. An organization can provide indemnification for its directors and officers independent of any insurance. Insurance is an agreement between a third party provider (e.g. CUNA Mutual Group) and the credit union to provide certain coverage to individuals or coverage to the credit union.
Q: Where can I find more information on these issues?
A: You can visit CUNA Mutual's Protection Resource Center at http://www.cunamutual.com/portal/server.pt?open=512&objID=351&mode=2 for management liability information, a Loss Prevention Library, a Webinar Library, and more.