1. Forms
2. MP
3. MP-00-09

What the Form Is

The MP 00 09 – Financial Institutions Executive Liability Side A Coverage Form is an insurance policy form developed by ISO. It is designed to provide direct indemnification to the directors and officers (executives) of financial institutions for losses arising from claims alleging 'wrongful acts' committed in their managerial capacity. This is specifically 'Side A' coverage, which means it applies when the financial institution is unable or not permitted by law to indemnify its directors and officers (e.g., due to bankruptcy or legal prohibitions). It protects the personal assets of the executives in such situations.

Classes of Business It Applies To

This form is tailored for Financial Institutions. Real-world examples of entities that would use this form include:

• Banks (commercial, savings, community)
• Credit Unions
• Insurance Companies (though they may have specialized forms)
• Investment Firms (broker-dealers, asset managers)
• Savings and Loan Associations
• Other financial services organizations regulated by bodies like the FDIC, OCC, Federal Reserve, SEC, or state banking and insurance departments.

Claims can stem from various sources, such as shareholder lawsuits alleging mismanagement leading to financial loss, regulatory investigations and enforcement actions, or errors in judgment that adversely affect the institution.

Special Considerations

• Side A Specificity: It is crucial to understand that MP 00 09 provides only Side A coverage. It does not cover the financial institution itself for its own liability (Side C or Entity Coverage) nor does it reimburse the institution for indemnification it has provided to its executives (Side B Coverage). This makes it a critical layer of personal protection for D&Os, especially when the institution's ability to indemnify is compromised.
• Non-Rescindability: Side A coverage forms are often non-rescindable, at least for innocent insureds, meaning the policy cannot be voided by the insurer even if there were misrepresentations in the application (though this depends on specific policy language and endorsements). This is a vital feature for attracting and retaining qualified directors and officers.
• Order of Payments: This coverage may sit as primary for non-indemnifiable claims or could be excess over other D&O policies or any indemnification that is available.
• Heightened Regulatory Scrutiny: Financial institutions operate in a complex and stringent regulatory environment. This increases their D&O liability exposure, making forms like MP 00 09 particularly important.

Key Information for Agents and Underwriters

• Risk Assessment: Underwriting this coverage involves a thorough analysis of the financial institution's stability, its corporate governance practices, the experience and integrity of its management team, its history of regulatory compliance, internal controls, and any past or pending litigation.
• Pricing Factors: Premiums will be influenced by the institution's asset size, type of financial services offered, overall risk profile, requested limit of liability, retention levels, and the breadth of coverage (including any endorsements).
• Identifying Coverage Gaps: Agents should ensure clients understand the Side A only nature of this form. A comprehensive risk assessment should determine the need for other D&O coverage components (Side B, Side C) and potentially other management liability policies such as Employment Practices Liability (EPLI) or Fiduciary Liability (like ISO form MP 00 07).
• Endorsements: A wide array of endorsements can be attached to modify the MP 00 09. For example, the MP 04 series includes numerous exclusion endorsements (e.g., MP 04 09 Nuclear Energy Liability Exclusion, which is often mandatory), while the MP 05 series addresses limits and retentions. Underwriters must carefully select and agents must clearly explain these endorsements.
• Market Conditions: The D&O market for financial institutions can be cyclical. Capacity and pricing can fluctuate based on industry loss experience, regulatory changes, and overall economic conditions.