Opinion  Summary of Selected Opinion 97-150

Date:	01/01/1997
Organization:	Division of Banks

This opinion was issued in 1997.

Offering insurance products to directors

State chartered-credit unions are authorized to provide group life insurance or group medical, surgical or hospital insurance or benefits to all or any combination thereof for its employees, officers, and directors, pursuant to Massachusetts General Laws ch. 171 § 25. Although the statute authorizes the Commissioner of Banks to establish reasonable restrictions on such insurance or benefits by regulation, the law contains no other provision. In addition, under the statute all such insurance or benefits must be group plans.

Unlike most provisions of Massachusetts General Laws ch. 171, section 25 provides a general grant of authority to a credit union for such group plans. Moreover, the Division of Banks has not promulgated regulations to establish restrictions for the various authorized plans. Accordingly, a state-chartered credit union has discretion to choose the type of group insurance plan, if any, it will provide for its directors. However, it is the position of the Division that as a group plan it must cover all directors equally and be consistent with any normal classifications that may occur, if any, within a group policy. Such an insurance plan may not be used as a means of providing compensation to the directors. Massachusetts General Laws ch. 171 § 17 clearly states that a director cannot receive compensation for his services as a member of the Board or as a member of any committee. It is the position of the Division that a policy providing coverage to an individual after retirement from the board of directors is a benefit. Furthermore, such a benefit and any options thereof, are a form of compensation; specifically, they are deferred compensation. If an insurance plan violates Massachusetts General Laws ch. 171 § 20, it may not be used by a state-chartered credit union.