Protecting the personal assets of plan fiduciaries
Fiduciary Liability Insurance Resources
Fiduciary Insurance is considered 1st Party coverage and may only be purchased by the named fiduciaries of a company ERISA Plan. Third parties (TPA's, Investment Advisors) who may be providing services as a fiduciary to the plan should obtain Errors & Omissions insurance for their exposure.
ERISA requires that a fiduciary of an employee benefit plan act solely in the best interest of participants and beneficiaries. Fiduciaries can be held personally liable for any breach of their responsibilities.
Recent studies indicate significant increases in claims severity and frequency over the past several years.
Fiduciary Claims
The frequency of claims against fiduciaries increased threefold during the late 1990’s. Plan fiduciaries now surpass the medical profession as a target for litigation.
The average claim has surpassed $800,000–up from $700,000 just five years earlier. Defense costs during this same period rose 471%.
More than 90% of the claims are filed by plan participants. Unions, government agencies, and other entities make up the remainder.
Nearly 50% of the claims arise out of benefits disputes. Other issues that may give rise to legal action include administrative errors and deficiencies in the communication of participant
Fiduciary Resources
Frequently Asked Questions about Fiduciary Insurance
Who is a Fiduciary under ERISA?
New ERISA bond requirements 12/07
What does it cost? Estimated premiums based on plan size
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Fiduciary Liability Claim Issues |
|
| Benefit Disputes, including denial | 47% |
| Civil Rights, including discrimination | 9% |
| Reduction of plan benefits | 9% |
| Communication of plan benefits | 7% |
| Misleading representations | 6% |
| Administration error in benefit plan | 5% |
| Imprudent investments/services | 4% |
| Other issues | 13% |
