Fiduciary Liability
Fiduciary liability risk is often referred to as the “hidden risk” due to the inherent nature of its oversight - it is one of the less discussed, more misunderstood product lines in a company’s insurance portfolio. This coverage is not to be confused with ERISA (or employment benefit liability) that may be attached to a general liability policy. Where ERISA is required to protect the plan’s funds from theft or fraud, Fiduciary insurance provides protection for the fiduciaries’ personal assets while managing the fund. Claims can arise from:
- Administrative errors & oversights
- Failure to enroll or divest
- Negligence and breach of duty
- Improper selection of outside providers and/or failure to oversee providers
Any company that provides employee benefits has an inherent need for both ERISA and Fiduciary Liability. Claims asserting errors and resulting losses to plan assets can be costly, time consuming and damaging to the company's reputation. Statistics from Towers Watson and the Department of Labor indicate:
- Average settlement was $994,000
- Average defense costs were $365,000
- In 2014/2015 the DOL closed 6,369 ERISA related civil investigations
As with all executive and management liability policies, terms, conditions and definitions can vary greatly between carriers. An experienced insurance advisor plays a key role in the coordination, analysis and negotiation of coverage terms. Through an individualized approach, we work closely with our clients to tailor programs that fit their needs.
