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Fiduciary Insurance
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As an Investment Advisor or Financial Professional it is
prudent business practice to inform your clients about Fiduciary
Insurance…
What
do YOUR CLIENTS need to know about Fiduciary Insurance?
Companies generally
create employee benefit plans to help attract and retain quality
employees. However, they may not be aware of the liability exposure
created from the management of these plans. Or, that utilizing a
third-party plan administrator (TPA) does not eliminate their exposure.
Even more concerning is
that as a fiduciary (trustee) of a companies Retirement Plan, or Welfare
Plan (including medical, dental, life and disability), ERISA holds them
personally liable.
To obtain indications for Fiduciary Insurance for your client's simply
complete our one-page questionnaire
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Understanding your Exposure |
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Download our PowerPoint Presentation and
Tutorial to assist you in educating your clients on The importance of
Fiduciary Insurance.
PowerPoint Presentation
PDF Format
Tutorial (pdf)
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Plan
producers shy away from fiduciary insurance
InvestmentNews article in the wake of
the Supreme Court's decision LaRue.
Read the article |
A Fiduciary
Liability policy protects
the personal assets of a plan Fiduciary due to allegations of breach of
fiduciary duties.
What can
fiduciary insurance policies cover?
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Breach of fiduciary duties
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Negligent errors and omissions
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Improper disclosures to plan
participants
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Remiss investment advice
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Imprudent choice of outside
service provider (OSP)
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Faulty advice of counsel
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Improper amendments to plan
documents
Who is
considered a Fiduciary under ERISA law?
A Fiduciary is any person who:
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exercises any discretionary
authority or discretionary control in managing the plan or who has any
authority or control in managing or disposing of its assets;
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renders investment advice for a
fee or compensation with respect to any monies or other property belonging
to the plan; or
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has any discretionary authority
or responsibility in administrating the plan.
Why Purchase Fiduciary liability?
To Avoid Loss of Plan Assets
– Using plan assets to defend ERISA litigation is a very questionable use of
plan assets, and potentially a breach of fiduciary duty. Another potential
breach is for the plan to lose money that could have been paid by a fiduciary
liability policy, had one been in place. ERISA explicitly allows for the
purchase of fiduciary liability insurance.
What does it cost?
A short application is required to determine eligibility and actual costs.
However, premiums are based on the size of the plan and average:
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Size of Plan (Assets) |
Average Annual Premium |
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$1,000,000 - $2,000,000 |
$800 -
$1000 |
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$2,000,000 - $5,000,000 |
$1000 -
$1200 |
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$5,000,000 - $10,000,000 |
$1300 -
$2000 |
*Premiums based on
a Defined Contribution Plan and $1MM limits of liability
Typical Fiduciary Liability Insurance coverage highlights:
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Broad definition of
insured including the company, its benefit plans and its fiduciaries
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Optional $100,000 sublimit
for qualifying voluntary settlement fees
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Optional coverage for
defense outside the limits of liability
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Coverage for 502(i) and
502(l) civil penalties
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Broad employee benefit
plan language including plans outside the United States of America and any
excess benefit plans
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Broad wrongful acts
definition includes allegations of breach of fiduciary duty and errors and
omissions
- No
deductible will apply for most risks
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