Most financial institution directors and officers never need to take advantage of their civil monetary penalty insurance, which is a testament to their good judgment and expansive knowledge of regulatory systems. However, even the most educated and judicial individuals might fall afoul of a regulatory body due to rapidly changing rules, discretionary enforcement or any of the other myriad flaws in the financial watchdog system.
Just in Case
Civil monetary penalty insurance covers bank or financial institution officers that are assigned penalties for breaching their duties. This might be a willful breach, but it could conceivably be a thoughtless omission. As anyone could make a small error that leads to unethically won gains for an organization, insurance to cover penalties is considered a standard protector of leadership peace of mind.
It is wise to work with an insurance agent in order to understand the risks of these types of acts. Civil penalties are typically equal to the amount and gained by the act. Therefore, it is usually advantageous to determine the coverage amount based on the amount one might gain from an illicit act or omission during normal operation of his or her area of the financial industry. Due in part to the personal nature of the loss, leadership members tend to keep their own civil monetary penalty insurance policies that renew in synchronization with their institutions’ director and officer protections.