1. Welcome to the MNA Webinar: Demystifying Directors and Officers Insurance If you are seeing this slide, congratulations, you have accessed the video portion of today’s webinar. For the audio portion, you must dial 1-866-740-1260 and enter this access code when prompted 7390#

2. “Be On Guard” Presentation Speakers Christopher J. Ziemba Chris is a Managing Claims Attorney for Monitor Liability Managers, LLC. He is responsible for Employment Practices Liability and Nonprofit Management Liability claims. He has been employed by Monitor for the past seven years and has been a practicing attorney for 13 years. Chris is a graduate of Chicago- Kent College of Law, holds an M.B.A. from the Illinois Institute of Technology and is a member of the Illinois Bar. Jennifer is an Underwriting Manager for Monitor Liability Managers, LLC, responsible for the Nonprofit Management Liability Insurance product. Since joining Monitor in 2000, she has held underwriter and senior underwriter positions in Employment Practices Liability and Lawyers Professional Liability. Jennifer is a graduate of the University of Illinois with a bachelor’s in sociology. Jennifer Pearson

3. Be On Guard Understand the Risks That Can Threaten Your Organization Presented by The Montana Nonprofit Association and Monitor Liability Managers, LLC

4. Why This Webinar Is Right for You … You direct, manage or make decisions that affect a nonprofit organization in the state of Montana You want to understand the risks that can threaten your organization You want to be prepared and protect your organization

5. Have You Heard About…? The executive terminated after the organization found $55,000 in grant money was misappropriated for his own use. Then the lawsuits started to fly. The band filed a trademark infringement suit against a conservation and environmental foundation. Four years later… The employee who filed a wrongful termination suit alleging retaliation for notifying government authorities of improper expenditures. Oh, the publicity!

6. What Have You Got to Lose? Litigation defense expenses Verdicts Settlements Loss of nonprofit status Adverse publicity and media attention Loss of donations Reputation

7. Why Do Nonprofits Need D&O, EPL and Fiduciary Insurance? Protects individual directors and officers when claims are made against them Protects the nonprofit organization against liability for claims brought by employees and/or customers Protects fiduciaries responsible for managing the organization’s retirement plans Helps attract/retain qualified board members

8. What is a Claim? Various policies may define “claim” differently – A written demand for monetary or non-monetary relief – Administrative charges (federal, state or local) – Criminal investigations – Lawsuits

9. Types of Directors and Officers Liability Claims Contract disputes Business interference Copyright Patent Antitrust Plagiarism Wrongful entry/eviction Personal injury Defamation False arrest/imprisonment Donation restrictions

11. Most Frequent Claims are Employment Related EEOC Workplace Charges filed in 2009 * – Over 93,000 charges filed – The average cost of an EEOC lawsuit in 2009 exceeded $235,000 – While retaliation, gender and racial discrimination were the most frequently filed charges in 2009, the EEOC reported significant increases in disability, national origin and religious discrimination charges * Statistics from the U.S. Equal Employment Opportunity Commission’s Web site, www.eeoc.gov

12. Types of Employment Practices Liability Claims Employees Wrongful termination Harassment Discrimination Failure to promote/hire Retaliation Defamation Wage and hour (FLSA) Negligent Supervision Constructive Discharge Negligent Hiring

13. Customers & Clients (Third Party) Fraud Deceptive trade practices False advertising Quality of product Discrimination Humiliation Harassment Types of Employment Practices Liability Claims

14. “Welcome to Shepherd Training 101. You lead. They’ll follow.”

15. Expectations of Nonprofit Leadership Duty of… Care – Reasonably prudent person standard Loyalty – Placing organization’s interests first Obedience – Compliance with statutory and common law, bylaws and charter Are all decisions being made to reflect the organization’s mission?

16. What is Nonprofit Management Liability Insurance? Insurance policy designed to protect individuals and entities from allegations of wrongful acts committed while serving as a director or officer of a nonprofit organization. There are generally 3 components of a Nonprofit Management Liability policy – Directors, Officers and Organization Liability – Employment Practices Liability – Fiduciary Liability

17. Directors and Officers Liability Protects the organization and directors and officers from claims arising out of any wrongful act – A wrongful act is defined as any actual or alleged breach of duty, neglect, error, misstatement, misleading statement or omission Includes Personal Injury coverage – Actual or alleged defamation, invasion of privacy, wrongful entry, eviction, false arrest, false imprisonment, malicious prosecution, infringement of copyright or trademark, unauthorized use of title, plagiarism or misappropriation of ideas

18. Employment Practices Liability Protects insured persons (including volunteers) and the organization from allegations of wrongful employment acts – Wrongful employment acts include but are not limited to harassment, gender, race or age discrimination, retaliation and wrongful termination Protects insured persons (including volunteers) and the organization from third-party claims brought by clients or customers

19. Fiduciary Liability The policy responds to wrongful acts pertaining to employee welfare benefit plans as defined by ERISA Wrongful acts include – Breach of duty imposed by ERISA – Acts/Errors in the administration of a benefit plan – “Other” matters alleged against a fiduciary of the plan The policy responds to – Demands for monetary and non-monetary relief – Formal administrative or regulatory proceedings – Investigations conducted by federal, state or local government agencies

20. I Have A Claim...Now What? What happens if my nonprofit receives a claim? What do I do next?

21. Duty to Defend Insurer controls the defense of the claim, including choice of counsel After the deductible has been met, defense fees and costs are paid by the insurer Defense counsel and the insurer work together with the organization to resolve the matter amicably

22. Monitor’s Experience For almost two decades, we have been devoted to working with nonprofits, from small to large Monitor issues policies through A+ rated carriers – Admiral Insurance Company – Berkley Insurance Company – Carolina Casualty Insurance Company As a member of the W. R. Berkley Corporation, Monitor has the financial strength of a larger corporation combined with the outstanding customer service of a smaller company.

23. Nonprofit Association Endorsements 11 State Nonprofit Associations Center for Nonprofit Management (Tennessee) Colorado Nonprofit Association Connecticut Association for Nonprofits Delaware Association of Nonprofit Agencies Hawaii Alliance of Nonprofit Organizations Idaho Nonprofit Center Minnesota Council of Nonprofits Montana Nonprofit Association North Dakota Association of Nonprofit Organizations Texas Association of Nonprofit Organizations (TANO) Wisconsin Nonprofits Association 2 Specialty Nonprofit Association Endorsements Texas Association of Business Human Services Federation (Nebraska)

24. More Affordable than You Think I may never have a D&O or Employment Practices Liability (EPL) claim. Why should I spend the money? – Risk transfer is a business decision The average EPL claim costs over $100,000 The average Nonprofit D&O claim costs more… – Depending upon organization and size, D&O/EPL policies start at approximately $650

25. Questions & Answers

26. For More Information Sherry Brophy sbrophy@pfgworld.com (877) 455-6767 For more information on becoming a member of the Montana Nonprofit Association, please contact: Brad Robinson, Member Services Director MNA brobinson@mtnonprofit.org (406) 449-3717