Illinois Administrative Code
Title 38 - FINANCIAL INSTITUTIONS
Part 190 - ILLINOIS CREDIT UNION ACT
Subpart A - GENERAL PROVISIONS
Section 190.120 - Bond and Insurance Requirements
Universal Citation: 38 IL Admin Code ยง 190.120
Current through Register Vol. 48, No. 12, March 22, 2024
a) Bond:
1)
The board of directors or liquidating agent of each credit union shall provide
a fidelity bond in a form determined by the Secretary to meet the requirements
of this Section and issued by a corporate surety authorized to do business in
this State. The bond must provide coverage for the fraud and dishonesty of all
employees, directors, officers and committee members (see Sections 20(2), (3)
and (4) and 30(13) of the Act) and for losses caused by persons outside of the
credit union due to theft, holdup, vandalism and other criminal acts. Coverage
for the faithful performance of duty is an option the board of directors may
provide for all or selected employees, directors, officers and committee
members.
2) Each bond shall require
the surety to give a minimum of 30 days written notice to the Credit Union
Division of the Division prior to cancellation of any or all coverages set out
in the bond.
3) Any form of rider
or exclusion added to the bond must have prior approval from the Secretary, to
insure that at least the minimum bond is in effect and not
compromised.
4) A copy of the
Declaration Page describing the coverage of the bond and any riders or
exclusions are to be forwarded 10 days prior to the anniversary date or a
change in coverage to the Division by the surety. The Declaration Page must
show at least the following: the form number of the bond, the number of the
bond, the name of the credit union, the rating period, or anniversary date, the
term of the bond and the maximum limits of liability under the insuring
clauses.
b) Bond Schedule:
1) The minimum principal amount of
the bond shall be based on the total assets of the credit union, according to
the following schedule:
Total Assets |
Minimum Coverage |
$0 to $10,000 |
Coverage equal to the credit union's assets |
$10,001 to $1,000,000 |
$10,000 for each $100,000 or fraction thereof |
$1,000,001 to $50,000,000 |
$100,000 plus $50,000 for each million or fraction thereof over $1,000,000 |
$50,000,001 to $295,000,000 |
$2,550,000 plus $10,000 for each million or fraction thereof over $50,000,000 |
Over $295,000,000 |
$5,000,000 |
2)
Coverage in amounts in excess of the above minimum requirements may be
purchased when the board of directors, in fulfilling its duty to provide
adequate fidelity bond coverage, determines the additional coverage is needed.
Minimum coverage limits must be extended to cover the additional risk when,
aside from events that cannot be expected to recur, the total of cash on
premise or in transit exceeds the minimum coverage limits. For purposes of this
Section, the term cash shall include currency, coin, share drafts, checks,
banknotes, Federal Reserve notes, revenue stamps, postage stamps and SNAP
benefits.
3) The board of directors
shall review the bond coverage at least once each year to determine that the
bond coverage is adequate and at a minimum, is in compliance with the above
scheduled requirements. The board of directors may, consistent with the
requirements of this Section, elect to purchase bond coverage subject to a
deductible.
4) The maximum amount
of deductibles allowed shall be based on the total assets of the credit union
according to the following:
Assets |
Maximum Deductibles |
$0 to $100,000 |
No deductibles allowed |
$100,001 to $250,000 |
$1,000 |
$250,001 to $1,000,000 |
$2,000 |
Over $1,000,000 |
$2,000 plus 1/1000 of total assets up to a maximum deductible of $200,000. |
5)
No deductible shall exceed 10% of a credit union's Regular Reserve unless the
credit union creates a segregated Contingency Reserve for the amount of the
excess. The Reserve for Loan Losses account may not be considered part of the
Regular Reserve when determining the maximum deductible. The deductible shall
not exceed the maximum amounts listed in subsection (b)(4) unless approved by
the Secretary in accordance with subsection (b)(6).
6) A deductible may be applied separately to
one or more insuring clauses in a blanket bond. Deductibles in excess of those
shown in this Section must have the written approval of the Secretary at least
20 days prior to the effective date of the deductibles. For purposes of this
Section, the Secretary shall allow an excess deductible if the credit union
will not be harmed. In making that determination, the Secretary shall consider,
but is not limited to, the adequacy of reserves, the current financial
condition of the credit union, financial trends and the credit union's lending
record.
7) The Secretary will
require increased bond requirements for any credit union when the Secretary
determines that current coverage is insufficient. In making that determination,
the Secretary shall consider the factors listed in subsection (b)(6). The board
of directors of the credit union must obtain additional coverage within 30 days
after the date of written notice from the Secretary.
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