Fiduciary Insurance.

The Employee Retirement Income Security Act (ERISA) established minimum standards for voluntary pension and health plans which companies must adhere to. Fiduciary Insurance gives coverage to the sponsor company, the plan(s) and any individual exercising fiduciary responsibilities.

The first responsibility of a fiduciary is to run the plan solely in the interest of participants and beneficiaries. Part of this responsibility is to make sure that those participants know and understand the operation of the plan and their options within it. Because of the complex nature of these benefit plans and the volatility of returns inherent in them, it is a virtual certainty that no participant will fully understand what they have.

Claim scenarios show most participants were not aware of what options they had or who to ask for assistance with decisions regarding the retirement plan. Combining this with the fact that many plan participants will be faced with returns that do not match expectations means that every plan participant or beneficiary could potentially file a claim citing breach of fiduciary duties against the sponsor company, the plan or the individual given fiduciary those responsibilities for the plan(s). Following is a link to an article showing the perils of having company stock within a sponsored plan:

http://chubb.com/businesses/csi/chubb3650.pdf.

While it is somewhat lengthy, it provides good food for thought.

Contact Ben Miner at Financial Specialty at 214-468-8666 to discuss how fiduciary liability coverage can help protect against the risks associated with the operation of an ERISA plan.

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