Minimizing Risk through Insurance Coverage: 
Three Essential Products for Minnesota Financial Institutions
Midwest Bankers Insurance Services LLC (MBIS), an agency created from a partnership between Wisconsin Bankers Association Employee Benefits Corporation (EBC) and the Minnesota Bankers Association (MBA), leverages the resources of both partners to bring member banks comprehensive insurance options. Several of these customized insurance services have become increasingly popular due to the current regulatory environment and the pressures it puts on financial institutions, particularly community banks.

Directors and Officers Liability Coverage

Bank officers and members of the board of directors face increasing scrutiny from regulators, with pressure from customers, stakeholders and staff to ensure the bank’s profitability. This policy protects these key bank leaders and bank entities from loss due to lawsuits, criminal/civil proceedings and demands of money by customers, shareholders and/or third parties. 

Banks today face many exposures in regard to D&O (Directors and Officers) liability. D&O coverage through MBIS offers protections against many of them, including lender liability, employment practice liability and professional services liability. Customers account for nearly 70 percent of lawsuits brought against banks, and the lender liability coverage available with MBIS will help protect against that risk. 

Financial Institution Bond Coverage

Another growing risk today’s banks face is fraud. Financial institutions have always had to contend with scammers and the potential for dishonest employees, but today’s technology-immersed environment makes staying ahead of the game even more difficult. Common transactions like wire transfers are recent targets for fraud. 

In response to this rising trend, banks must be prepared for circumstances where the institution faces losses due to fraud. With Financial Institution Bond Coverage through MBIS, banks are provided coverage for fraudulent acts committed by employees, customers or third parties. 

Master Property Coverage

While the U.S. economy is no longer in a recession, growth is slow. As part of that, many banks are dealing with an increase in foreclosure actions. Protecting these assets through insurance is common practice, but sometimes a property is unique and is problematic for the bank property carrier to insure. For example, an operating restaurant or business, vacant properties and resort properties often present exceptional risk and are therefore difficult to insure on a bank’s property and casualty package.

Master Property Coverage through MBIS can help banks cover liability and physical damage on these distinctive properties. “We can help banks that are struggling to insure unique foreclosure properties as carriers tighten their standards,” said Jeff Otteson, sales director for MBIS. Another advantage to the Master Property Coverage through MBIS is that it can be used to force place physical damage and liability coverage on the borrower when the bank becomes aware the borrower’s policy has lapsed, or been non-renewed or cancelled.  Master Property coverage is an all risk policy as opposed to the property and casualty package where Basic coverage is offered.

The best protection against losses due to litigation, fraud or lapsed borrower coverage is to follow internal bank policies and procedures. However, proper insurance coverage can also help banks to minimize losses, and because MBIS works for banks and is run by banking advocates, you can be sure they know your institution’s needs better than generic insurance carriers.
If you are interested in finding out more about MBIS or the products available please contact Jeff Otteson at 608-217-5219 / jeffo@mbisllc.com or Adam Dawson at 952-857-2604 / adamd@mbisllc.com.