Shifting Responsibility to the Individual

Shifting Responsibility to the Individual

The landscape of financial regulation is constantly shifting. What was acceptable last year may not be so today. One of the many changes that characterize the financial industry has affected civil money penalties insurance, specifically regarding who carries the policies.

Increased Oversight

A long trend of increasing regulatory scrutiny has led to many financial institutions choosing to protect their officers against damages they may incur while pursuing the best interest of the company. These so-called directors and officers policies protect leadership against an array of losses. However, civil money penalties insurance is no longer a popular element of this package.

The reason for this is not because penalties of this type have disappeared. In fact, the portfolio, when taken as a whole, is similar to that previously used. However, while the coverage is largely similar to the old type of insurance, one major distinction is that this new civil money penalties insurance is offered separately from the officers’ insurance package.

The Bottom Line

This does not mean that the policies are any more difficult to manage than they were previously. In fact, most policies are written to expire concurrently with the director and officer protection policy of the institution. Separate policies in this case only means that individuals now typically carry their own civil penalties insurance and pay for it personally.