Civil Money Protection Policy
Frequently Asked Questions
1. What is a Civil Money Penalty (CMP)?
A CMP is a fine assessed by the Federal Deposit Insurance Corp (FDIC) for not only punitive purposes
but also as a deterrent for future violations of:
 laws or regulations;
 orders issued;
 conditions imposed in the connection with the approval of an application; or
 written agreements between an institution and a federal banking agency
2. What constitutes a violation?
The FDIC defines violations as including, but not limited to, "any action (alone or with another) for or
towards causing, bringing about, participating in, counseling, or aiding or abetting a violation.” This is an
extremely broad definition and arguably creates some gray area on whether or not a Director or Officer
can be imposed a fine when they haven’t actually done anything wrong.
3. What are the potential penalties?
It is the FDIC's policy that, whenever a violation committed by an individual results in personal financial
or economic gain and/or financial loss to the bank, the amount involved shall be repaid as a portion of
the penalty assessment or, preferably, through restitution to the bank if the bank suffered a loss.
More specifically, an attempt should be made to have the individual make restitution to the injured bank
for all losses suffered, or absent restitution, repay the personal gain or bank loss through the
recommended assessment, plus pay a penalty over and above these amounts for violating the law.
Tiered penalties have been established:
 Tier 1: $5,500 per day for most violations
 Tier 2: $27,500 per day if a party recklessly engages in an unsafe or unsound practice which is
part of a pattern of misconduct that causes more than minimal loss or results in a pecuniary gain
for the individual.
 Tier 3: $1,100,000 or 1% of total assets (lessor of) for acts that cause substantial loss or
substantial pecuniary gain.
4. What happened to CMPs being covered under my Directors & Officers (D&O) Insurance Policy?
Though the FDIC had prohibited indemnification payments for fines and penalties imposed by federal
banking agencies via Part 359 of the FDIC Act since 1996, it wasn’t until October 2013 that they issued
an opinion letter explicitly stating CMPs were not to be covered by D&O Insurance. This was done with
the implication that insuring CMPs encourages risky behavior. In response to the letter, most insurance
carriers removed the CMP provision from their policies even though some CMPs may be imposed
without a Director or Officer committing an egregious offense.
5. Do I have access to any coverage for Civil Money Penalties?
Yes, and we can help. Even though the FDIC does not allow the D&O Policy to be used as a vehicle to
cover civil fines and penalties it does, however, cover defense expenses. This is why AmTrust has
developed the Civil Money Penalties Personal Protection Policy to help bridge the coverage gap
created by the FDIC mandate that all D&O Policies be modified to delete the CMP coverage.
6. If the FDIC has prohibited coverage, how can AmTrust insure the CMP exposure?
The FDIC’s mandate states that the financial institution cannot indemnify their Directors & Officers for
CMPs. The key factor in the coverage itself is that it is applied for, paid for and issued in the name of
the individual - the financial institution is only referenced in the policy to define the activities covered for
the insured person.
AmTrust developed this product in response to an industry need. The product was developed after
conferring with industry insurance experts, legal counsel, and the American Association of Bank
Directors (AABD). AABD endorses and stands behind the product. Keep in mind that bank regulatory
agencies do not have jurisdiction over the private insurance market; therefore, they cannot prevent an
individual from purchasing insurance in the private sector independent of the financial institution and
outside their jurisdiction.
7. What about the coverage itself?
Coverage is available on a standalone basis, meaning you (nor your financial institution) are required to
have any other insurance policies with AmTrust. It is written on an Excess & Surplus paper through
AmTrust (rated “A” by A.M. Best). Coverage is subject to an application and underwriting guidelines
and offered at the below terms/pricing.
Individual Retention Amount
(Deductible)
$0
$500
$1,000
$100,000 Limit
$250,000 Limit
$750
$650
$500
$1,500
$1,300
$1,000
* The above premiums are quoted net on E&S taxes. These rates are for individuals serving at privately-held banks >15
years old with Texas Ratio <50% and Tier 1 Leverage ratio >7%. The above pricing also assumes the institution is not
under any type of regulatory order or agreement and the individual D&Os have had no CMPs assessed against them in the
past 5 years. Individuals/banks not meeting these guidelines should contact their broker to discuss availability.
8. How do I apply?
Applying for coverage is easy! Your broker will have you complete a short application representing that
you are not aware of any claims or facts or circumstances that would give rise to a claim. They will
return the completed/signed applications and we will ask for your payment to be made within 30 days of
binding coverage.