Public officials must balance the responsibility of holding office and not succumbing to the pressures of corruption. Many essential duties come with having a job in public office, and they need a good plan to prevent liability. Among these is the obligation to manage the funds of the public carefully. Leaders must act as principled stewards and avoid any appearance of monetary mishandling, but this task demands more than just the absence of wrongdoing. Insurers can commit to helping public officials manage funds by providing risk management strategies and coaching.
Public Officials and How They Can Overcome Hurdles

Learn how you can partner with your public official clients.

Acknowledge the Pressure Public Officials Face

Research indicates that the country may be more politically divided than ever before. This disheartening suggestion should come as no surprise to public officials who interact with their constituents. People may look for evidence — or even fabricate evidence — that a political adversary is acting unethically. Insurers need to understand this when considering allegations of mismanaged funds. Regardless of whether such accusations are true, a public officials liability & employment practices policy can offer essential protection.

Understand Regulations Regarding Spending

Although charges of misspending may not always be legitimate, there are many instances in which they are. The Federal Election Commission mandates that public leaders may exercise discretion in how they spend their campaign funds. There are stipulations, though, including the documentation of disbursements. A disbursement is a payment or purchase that a public official or committee submits. Public officials must report these transactions to the FEC in compliance with Federal Election Campaign Act. 11 CFR 300.2(d). Failure to comply may constitute the mismanagement of funds.

Identify the Most Common Spending Liabilities

Reporting campaign spending may not seem urgent, but it maintains the accountability that public officials must cultivate. There are other common spending liabilities, too, that insurers should understand. Using campaign funds to offer illicit incentives, for example, can quickly land public officials in hot water. Similarly, deceitful practices such as influence-peddling and bid-rigging can lead to legal consequences. Insurers must keep their clients accountable by identifying these risks and looking out for potential warning signs.

Public Officials Must Develop a Fund Management Plan

Insurers can also partner with their public official clients to develop a comprehensive fund management plan. This plan should address a campaign’s overall budget, the disbursement reporting process, and the ethical standards governing transactions. You can contribute to this strategy by offering risk management suggestions to integrate into the plan. It may help you better understand your clients’ finances, and it will also help your client understand the importance of risk mitigation.

Empower Public Officials To Act Responsibly

Some public officials pursue politics because they want to improve their communities. Unfortunately, others follow this path because they seek access to resources — including political funds. It’s not easy to discern your clients’ motives, but you can steer them toward the path of accountability by offering advice for handling campaign funds. It will encourage them to act responsibly and avoid mistakes that could cause legal liability. Work with your clients to further reduce risk by implementing a financial management strategy.

About PGUI

Professional Governmental Underwriters, LLC., is a full-service risk management company dedicated to assisting public, educational, and non-profit entities in the management of their professional liability exposures including educators liability insurance. We are dedicated to providing state-of-the-art professional underwriting management and loss control advisory services on behalf of our designated carriers. For more information, call us toll-free at (800) 586-6502.