{"id":2906,"date":"2019-12-09T01:27:51","date_gmt":"2019-12-09T01:27:51","guid":{"rendered":"https:\/\/suretyone.com\/blog\/?p=2906"},"modified":"2019-12-09T01:27:51","modified_gmt":"2019-12-09T01:27:51","slug":"fidelity-bond-credit-unions","status":"publish","type":"post","link":"https:\/\/suretyone.com\/blog\/fidelity-bond-credit-unions\/","title":{"rendered":"Fidelity Bond for Credit Unions (NCUA Rule Change)"},"content":{"rendered":"

Many financial institutions must comply with fidelity bond requirements. Both\u00a0corporation credit unions and natural person credit unions are no exception. A new Rule<\/a> recently adopted by The National Credit Union Association made some changes to the fidelity bond instruments that a CU must post. Pursuant to the the NCUA’s authority, “The\u00a0fidelity bond review\u00a0revealed several inconsistencies\u00a0between part 713 and approved bond\u00a0forms. The review also revealed several\u00a0outdated provisions that needed updating.\u00a0The NCUA published a notice of\u00a0proposed rulemaking\u00a0to update its fidelity bond\u00a0regulations to correct these deficiencies thereby ensuring\u00a0the sound operation of\u00a0CUs and to protect the National Credit\u00a0Union Share Insurance Fund\u00a0(NCUSIF<\/a>).<\/p>\n

The rulemaking context and precedence may be viewed in its entirety here<\/a>. In brief, there are just a few key provisions to the new rule of which CUs should familiarize themselves. In its first part the\u00a0modifications of\u00a012 CFR Parts 704 and 713, direct the Board of Directors to review a CU\u2019s fidelity and miscellaneous insurance coverages annually. The review must focus on the adequacy of insurance vis-a-vis the potential risks facing the credit union and in compliance with the existing minimum requirements. Fidelity bond proposals must be approved by a Board member and renewals of the same must be reviewed by a different board member. Under no circumstances may the approving member be employed by the CU under review.<\/p>\n

The second change addresses credit union service organizations (CUSOs). Previously CUSOs purchased separate fidelity bonds for the CU and its CUSO. The change allows for a blanket commercial crime policy however the CU must own no less than fifty percent of the CUSO. The covered party must appear on the credit union’s coverage declarations as an “additional insured”.<\/p>\n

The third change addresses the termination of fidelity bond coverage in the event of a CU liquidation. The provision applies differently depending on the type of liquidation that occurs. Traditionally an insurance carrier might offer an extended discovery “tail” to its insureds. The rule now requires the carrier to definitively offer claims tail endorsements. Under a voluntary liquidation the claim discovery period must run at least four months from final distribution of assets. In the case of an involuntary liquidation the liquidating agent must be afforded the option of a claim discovery period\u00a0that runs\u00a0no less than one year.<\/p>\n

The rule also obligates the National Credit Union Administration’s Board to conduct a review of fidelity bond forms no less than once each ten years. All new financial institution bond<\/a> forms must be approved by the NCUA before use.<\/p>\n

National surety leader, Surety One, Inc.<\/a> is a specialist in the bonding needs of financial institutions. We offer both surety and fidelity bonds needed by financial sector professionals in ALL fifty states, Puerto Rico and the U.S. Virgin Islands. Questions about a credit union fidelity bond? Call us at (800) 373-2804 or email us at Underwriting@SuretyOne.com. You may also visit our fidelity bond page<\/a> to browse our broad selection of financial institution bond offers.<\/p>\n","protected":false},"excerpt":{"rendered":"

Many financial institutions must comply with fidelity bond requirements. Both\u00a0corporation credit unions and natural person credit unions are no exception. A new Rule recently adopted by The National Credit Union Association made some changes to the fidelity bond instruments that… Continue Reading →<\/a><\/p>\n","protected":false},"author":1,"featured_media":2907,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[101],"tags":[2513,2514,105,106,2071,2515,51,2329],"yoast_head":"\nFidelity Bond for Credit Unions (NCUA Rule Change) • Surety One, Inc.<\/title>\n<meta name=\"description\" content=\"Many financial institutions must comply with fidelity bond requirements. 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