Fiduciaries and Plan Administrators need insurance coverage.
Private companies who sponsor pension, 401(k), ESOP and health and welfare plans, as well as the individuals who manage and administer these plans face unique exposures.
Their fiduciary responsibilities, such as avoiding conflicts of interest, maintaining investment diversification, and adhering to strict ERISA standards, expose them to potential lawsuits from plan participants.
Under the ERISA act of 1974, fiduciaries can be held personally liable for losses to a benefit plan incurred as a result of their alleged errors, omissions, or breach of their fiduciary duties. 1
Any employee who has discretionary authority over a plan or who assists in its administration can be exposed to liability. These employees might include an appointed fiduciary, a plan administrator, a human resources employee, or anyone who helps to administer a plan. 2
Many fiduciaries and plan administrators may not be adequately covered.
Often the General Liability, D&O, and Employee Benefits Liability (EBL) policies, as well as ERISA Bonds will not cover the exposures that plan fiduciaries face.
Sophisticated programs like early retirement or management restructuring introduce the possibility of ERISA liability claims. Plan fiduciaries can honestly, but mistakenly commit errors and violations of ERISA law.
