Marsh has launched FDIC Receivership Endorsement, a new insurance protection program designed to cover the costs associated with an FDIC receivership action.
Developed by Marsh’s Financial and Professional Liability Practice (FINPRO), the FDIC Receivership Endorsement is designed to protect senior management of covered financial companies, as defined under Dodd-Frank, that end up in receivership.
Such ‘covered’ organizations include bank holding companies, hedge funds, alternative investment funds, private equity funds, and venture capital funds.
The insurance broker said the endorsement will provide for reimbursement of costs incurred in responding to and defending against FDIC efforts under Dodd-Frank to repudiate and recoup compensation and benefits.
It will also provide for indemnification for amounts repudiated and recouped by the FDIC in the form of earned salaries, wages, commissions, benefits and/or other compensation obligations.
In the absence of this insurance coverage, senior management at covered financial companies placed into FDIC receivership could be required to forfeit up to two years of their compensation without any right of recovery.
Marsh’s FINPRO practice managing director Mark Cuoco said that while the full ramifications of Dodd-Frank may not be known for years, it is clear that the FDIC’s dramatically expanded authority represents significant personal risks to executives, directors, and general partners of financial companies.
"Marsh’s endorsement allows executives to protect their personal assets in an environment of increasing scrutiny of executive decision-making and compensation," Cuoco said.