Insurance for indemnification of directors and officers

§ 29. Insurance for indemnification of directors and officers. (a) Subject to subdivision (b) of this section, a cooperative shall have power to purchase and maintain insurance: (1) to indemnify the cooperative for any obligation which it incurs as a result of the indemnification of directors and officers under the provisions of this article, and (2) to indemnify directors and officers in instances in which they may be indemnified by the cooperative under the provisions of this article, and (3) to indemnify directors and officers in instances in which they may not otherwise be indemnified by the cooperative under the provisions of this article provided the contract of insurance covering such directors and officers provides, in a manner acceptable to the superintendent of financial services, for a retention amount and for co-insurance. (b) No insurance under subdivision (a) of this section may provide for any payment, other than cost of defense, to or on behalf of any director or officer: (1) if a judgment or other final adjudication adverse to the insured director or officer establishes that his or her acts of active and deliberate dishonesty were material to the cause of action so adjudicated, or that he or she personally gained in fact a financial profit or other advantage to which he or she was not legally entitled, or (2) in relation to any risk the insurance of which is prohibited under the insurance law of this state. (c) Insurance under paragraphs one, two and three of subdivision (a) of this section may be included in a single contract or supplement thereto. Retrospective rated contracts are prohibited. (d) The corporation shall, within the time and to the persons provided in subdivision (c) of section twenty-eight of this article, mail a statement in respect to any insurance it has purchased or renewed under this section, specifying the insurance carrier, date of the contract, cost of the insurance, corporate positions insured, and a statement explaining all sums, not previously reported in a statement to members, paid under any indemnification insurance contract. (e) This section is the public policy of this state to spread the risk of cooperative management, notwithstanding any other general or special law of this state or of any other jurisdiction, including the federal government.