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CUNA Mutual introduces new liability insurance
MADISON, Wis. (9/11/09)--CUNA Mutual Group has introduced Management and Professional Liability (MPL) insurance, a new policy designed to protect credit unions and the personal assets of their directors, officers, volunteers and employees from a growing number of litigation exposures related to operating a credit union. “Credit unions and their directors and officers face new risks in today's economic environment that can ultimately lead to increased lawsuits and significant losses,” said Chad Nitschke, CUNA Mutual vice president of Credit Union Protection. “In fact, legal defense costs can often exceed $100,000 before a trial even begins--an expense that could be devastating to an uninsured credit union in today’s economy, not to mention the financial impact to those who could be personally named in the lawsuit.” In 2009, the number of management liability claims reported to CUNA Mutual rose 72% compared with the same time period last year. Some of the key areas of expanding litigation risks for credit unions include:
* Collateral repossessions, loan defaults and foreclosures, all of which often lead to lender liability losses and potential suits against the board; * Credit union mergers, increasing exposure to lawsuits brought against the board; * Unemployment, historically an early indicator of employment practice suits; and * Focus on corporate governance, forcing the bar to be raised and making lawsuits against boards more likely.
The new MPL policy is offered as an alternative for credit unions renewing their Special Insurance Package on or after Jan. 1 in most states. MPL insurance provides protection from lawsuits arising from errors, omissions, misleading statements, breach of fiduciary duty and other management and services-related issues. The MPL coverages include:
* Management Liability--Protects the credit union and the personal assets of directors, officers, volunteers and employees against lawsuits related to management of the credit union; * Fiduciary Liability--Protects against breach of fiduciary duties including ERISA and errors in administering employee benefit plans including 401(k), pension, life insurance and heath insurance plans; * Professional Liability--Coverage for claims related to professional services and specified perils that are unique to credit unions such as shared branching, unfair or deceptive trade practices and deposit errors; * Lender Liability--Covers the credit union and staff against claims brought by borrowers for errors, misstatements, omissions, neglect or breach of duty connected with lending activities; and * Employment Practices Liability--Protects against alleged violations of federal, state, local or common law related to past, present or prospective employment by the credit union, such as allegations of discrimination, wrongful termination or workplace harassment.
MPL is part of CUNA Mutual’s Credit Union Protection insurance and risk management portfolio designed exclusively for credit unions to manage their financial, operational and personal risk exposures. The Credit Union Protection program includes:
* Bond; * Plastic Card; * Management and Professional Liability; * Property and Business Liability; * Business Auto; * Workers Compensation; and * Additional policies.
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