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Are You Covered?
Guest Editorial by Barry Thompson
I've learned there are many security officers who have been appointed by the Board of Directors, and are named as THE security officer in the records of the financial institution, but have not officially been appointed officers of their bank. It is quite possible these people have the liability and the responsibility that go along with the appointment, but do not have the protection they should have in case of lawsuit.
Regulators require financial institutions to purchase Directors and Officers Liability Insurance, commonly referred to as D & O Insurance. During every examination oaudit, the bank must provide proof to the examining body that coverage is maintained.
If you are recognized as an officer in the institution's bylaws, you are insured. If you are not, it's quite possible you are not insured. Your bank may not recognize the titles of Security Officer and/or Bank Secrecy Act Officer as an official officer's position. (It could be that Privacy Officer will also join this select group of titles.)
In some cases D & O insures all employees. Whoever purchases your insurance may be able to set your mind at ease by knowing that everyone is covered. The insurance market has been extremely competitive in recent years, and it's possible your policy has expanded to cover all. If that is the case, ask for it in writing - just for your records.
If you are informed that the policy doesn't provide coverage for all employees, don't panic. All that is needed is an endorsement to the policy that the Security Officer (BSA Officer / Privacy Officer) is covered. Your company must request it. Many times this endorsement will be added free of charge.
If you are not a recognized officer, get the expiration date of the present D & O policy. At each renewal time check with your inside contact to be sure the policy names all employees or carries the Security, BSA or Privacy Officer endorsement. The liability policy can change depending on how tight or loose the insurance market may be at renewal.
If you strike out completely with your financial institution, check with your homeowners insurance company about adding a million dollar bond to cover you. Perhaps your bank would pick up the premium for that.
Remember that a security officer can be sued for negligence or dereliction of duty, and according to attorneys, can be sued corporately and personally. BSA officers can also be sued by the government. Privacy Officers are still an unknown liability.
Take every precaution.
Barry Thompson is a Security Practitioner and Compliance Professional with over twenty years experience as a Bank Security Officer. He is Managing Partner of the Thompson Consulting Group, a training and consulting firm located in Oswego, New York. He can be reached at (315) 342-5931 or at www.Tgrouponline.com
Copyright © 2001 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 11, No. 2, 2/01
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