errors and omissions insurance Liability Insurance: ERISA and Fiduciary Responsibility | Axis Error & Omission
Error Omissions
Error Omissions
Submit your information below so we can contact you with a FREE quote
[All fields are required.]
Actual Annual Revenue:
Verify:
=
I have read and agreed to theTerms & Conditions
Error Omissions
Error Omissions

Liability Insurance: ERISA and Fiduciary Responsibility


Just as Employment Practices Liability claims are on the rise (discrimination, sexual harassment, wage-and-hour disputes), so are ERISA (Employment Retirement Income Security Act) plan lawsuits. The Seyfarth Shaw’s Workplace Class Action Litigation Report 2011 Edition found that the number of ERISA class actions rose from 8,944 in 2009 to 9,038 in 2010. Furthermore, with continued downturn economic conditions and employers looking to save money, including decreasing employee benefits, increased ERISA litigation is continuing its upward trend for 2011.

 

Examples of ERISA violations as outlined by the Department of Labor (DOL) include: failing to operate the plan prudently and for the exclusive benefit of participants; using plan assets to benefit certain related parties to the plan, including the plan administrator, the plan sponsor, and parties related to these individuals; failing to properly value plan assets at their current fair market value, or to hold plan assets in trust; failing to follow the terms of the plan (unless inconsistent with ERISA); failing to properly select and monitor service providers; and taking any adverse action against an individual for exercising his or her rights under the plan (e.g., being fired, fined, or otherwise being discriminated against).

 

It’s the fiduciary’s responsibility to follow the standards set by ERISA, including carrying out their duties prudently, acting solely in the interest of plan participants and beneficiaries, paying only reasonable plan expenses, and other key issues.

 

What can you do to protect yourself as a fiduciary?

 

First, be sure you have Fiduciary Liability Insurance, which will pay the plan or insured fiduciaries for liabilities incurred as a result of a breach of fiduciary duties under ERISA, including the cost of defending claims. Then be sure you have some key procedures in place, including but not limited to:

 

1. Establish and maintain a robust fiduciary investment review process.

2. Continuously monitor plan investments – at least annually.

3. Replace funds that don’t meet investment criteria.

4. Document reviews of investment vehicles, including associated or hidden fees. The documentation should address key questions or discussions and decisions made.

5. Solicit and consider the advice of independent third-party investment experts. Be sure

to always consider the nature of any advice, and whether any conflicts of interest exist.

6. Review the reasonableness of fees and expenses, including any fees that are shared among the plan’s various providers under revenue-sharing arrangements.

7. Adopt best practices that involve more aggressively negotiating and monitoring service provider fees.

 

Talk to us at Axis Insurance Services about Fiduciary Liability Insurance.

Comments

comments

Blogged on: November 22, 2011 by Mike Smith
Error Omissions
Error Omissions
Submit your information below so we can contact you with a FREE quote
[All fields are required.]
Actual Annual Revenue:
Verify:
=
I have read and agreed to theTerms & Conditions
Error Omissions
Error Omissions