1. Forms
2. MP
3. MP-04-05

What the form is

The MP 04 05 "Coverage Extension–Certain United Kingdom Fines or Penalties" is an endorsement designed to modify the ISO Management Protection Policy, specifically when used with the Fiduciary Liability Coverage Form (MP 00 07). Its primary function is to broaden the definition of "Loss" within the policy to explicitly include certain fines or penalties that may be imposed on the named insured by specific United Kingdom regulatory bodies: the Pension Ombudsman of England or the Occupational Pensions Regulatory Authority of England. Without this endorsement, such fines or penalties might otherwise be excluded or fall outside the standard definition of Loss in the Fiduciary Liability coverage.

Classes of business it applies to

This endorsement is relevant for organizations that have fiduciary responsibilities related to pension schemes subject to United Kingdom regulations. This typically includes:

• Multinational corporations with employees and pension plans in the United Kingdom.
• Companies that sponsor or administer UK-based pension schemes.
• Fiduciaries of pension plans that fall under the jurisdiction of the Pension Ombudsman of England or the Occupational Pensions Regulatory Authority of England.

Real-world example: A U.S.-based company has a subsidiary in the United Kingdom which offers a defined benefit pension scheme to its UK employees. The fiduciaries of this pension scheme could be subject to fines or penalties by UK pension regulators. This endorsement would extend their Fiduciary Liability coverage to include such eligible fines or penalties.

Special considerations

Key considerations for this endorsement include:

• Specificity of Coverage: The coverage extension is specific to fines and penalties from the two named UK regulatory bodies (Pension Ombudsman of England and the Occupational Pensions Regulatory Authority of England). It does not provide a blanket coverage for all foreign regulatory fines.
• Use with MP 00 07: This endorsement is explicitly designed to be used with the Fiduciary Liability Coverage Form MP 00 07. Its utility is tied to the underlying coverage provided by that form.
• Regulatory Environment: The UK pension regulatory landscape can be complex and subject to change. Organizations with UK pension exposures should stay informed about their obligations and potential liabilities.
• Exclusions in Base Policy: It's important to review the base Fiduciary Liability policy for any existing exclusions that might still apply, even with this endorsement in place, unless specifically overridden by this endorsement.

Real-world example: If a company's UK pension plan is investigated by the Occupational Pensions Regulatory Authority and a fine is levied for a breach of specific UK pension regulations, this endorsement would aim to cover that fine, subject to policy terms and conditions. However, if a fine was imposed by a different UK regulatory body not named in the endorsement, it might not be covered.

Key information for agents and underwriters

• Risk Assessment: Underwriters need to carefully assess the insured's exposure to UK pension regulations. This includes understanding the nature and size of any UK pension plans, the number of UK-based employees/beneficiaries, the insured's history with UK pension authorities, and their governance and compliance procedures for these plans.
• Pricing: The premium for this endorsement will likely reflect the perceived risk associated with the insured's UK pension liabilities. Factors such as the complexity of the pension scheme and the insured's risk management practices will be relevant.
• Coverage Gap Analysis: Agents should identify clients with Fiduciary Liability exposure who also have UK pension plan responsibilities. This endorsement addresses a potential coverage gap for fines from the specified UK pension authorities that might not be covered under a standard Fiduciary Liability policy.
• Underwriting Guidelines: Underwriters should confirm that the MP 00 07 Fiduciary Liability Coverage Form is part of the policy. They may also require details about the specific UK pension schemes, including their compliance history and any ongoing regulatory scrutiny. It's crucial to understand that this endorsement expands the definition of Loss for specific situations and doesn't alter other policy terms, conditions, or exclusions unless stated.