A Rising Need for Fiduciary Insurance | Daily Rosetta - Personal ...

If your firm offers any sort of employee benefit plan ? say a 401(k) or health insurance plan ? you need to consider whether you?re a candidate for fiduciary liability insurance. These policies protect against claims alleging improper investments, improper disclosures about the plan, or improper choice of outside service providers, among other actions.

Say a company is planning to initiate an early retirement program in a few months, and employees who participate will receive extra benefits. An employee who retires a month before the program kicks off isn?t told about it. that may lead to a claim of improper disclosure, says Barry Slevin, an attorney with Slevin & Hart, P.C., a law firm focused on employee benefits, and based in Washington D.C. An improper investment could occur when plan administrators invest in the company?s stock, knowing that the company?s future is uncertain, Slevin adds.

Claims from Several Sources

Claims of a breach of fiduciary duty can be brought either by a plan participant or a government agency, such as the Department of Labor. Even if the claims have no merit, defending against them can be pricey. That?s not all. As a fiduciary, your home, bank accounts and other personal assets can be at risk.

What?s more, you probably have a higher risk of being named in a claim than you think.

For instance, even if you?re not actually named as a fiduciary to the plan, if you have discretionary authority over the plan, you probably are a fiduciary-in-fact, says Michael Keeling, an attorney and president of the ESOP Association, a group that represents sponsors of employee stock option plans. ?When you?ve got your hands close to an ERISA or ESOP plan, you?re more than likely to be a fiduciary,? he says. ?It?s taking a lot of risk to assume that you?re not a fiduciary unless you?re named in the document.?"8?

Another common misperception is that you don?t need fiduciary insurance because you?ve got an ERISA bond. ?The ERISA bond is there to cover an employee embezzling funds from a qualified benefit plan,? says Jeff Gelburd, vice president with Murray Risk Management and Insurance in Lancaster, Pa. the bond would be used to make the plan itself whole, should an embezzlement occur. It is not for the use of plan administrators or fiduciaries who want to cover the costs of defending against any claims.

Third Parties Don?t Help

Think you?re off the hook because you hired a third-party administrator to help manage your plan? ?That?s not correct. There?s still exposure,? says Carl Zeutzius, director of sales and marketing with Unico Group, a Lincoln, Neb.-based insurance agency.

And, you may assume that the company itself will stand behind you, should any claims alleging a breach of fiduciary duty arise. for some large companies, this may be the case. however, ?if the company doesn?t have sufficient assets, the protection is more theoretical than real,? says Slevin. If your company is thinly capitalized or has a large pension plan (or both), fiduciary insurance becomes more critical.

Finally, some execs and business owners assume that any fiduciary claims would be covered by their directors and officers policies. Guess again. most D&O policies explicitly exclude fiduciary liability, says Keeling. ?You have to buy a special rider or get a totally separate policy.?

Growing Interest

Over the past 30 years, interest in fiduciary liability insurance has grown, due in part to the shift from defined benefit to defined contribution plans, in which the employee takes on the risk of investment losses, Slevin says.

In responding the Towers Watson 2008 Survey of Insurance Purchasing Trends, 45% said they had purchased fiduciary liability insurance, up from 37% a year earlier.

Development Dimensions International Inc. (DDI), a human resources consulting firm based outside Pittsburgh, has had fiduciary insurance since the late 1990s, says Helen Wylie, corporate administrator. ?We were becoming a bigger company, and needed to grow (our insurance coverage) with the times,? Wylie says. ?We?ve never had a claim, but we?re very happy to have the coverage.? the policy would protect DDI, its trustees and its executives if a claim was made alleging a breach of fiduciary insurance.

Given the many sizes of plans fiduciary insurance policies can cover, trying to pin down even a general cost range for a policy is almost impossible. still, most experts say coverage is reasonable. ?It?s very affordable in terms of an overall insurance budget,? Zeutzius says. And, ?without it, you?re leaving the personal assets of key people in the organization exposed.?

Source: http://www.dailyrosetta.com/a-rising-need-for-fiduciary-insurance/30201.html

paper belgium belgium jerry lewis edmonton oilers edmonton oilers euphoria