The 1974 passing of the Employee Retirement Income Security Act (ERISA) set forth many fiduciary obligations – creating numerous exposures for directors, officers, sponsor organizations plans and employees. The fiduciaries can be held personally liable for losses to a benefit plan incurred as a result of alleged errors, omissions, or breach of their fiduciary duties.
Fiduciary Liability coverage is often confused with Employee Benefits Liability insurance and ERISA bonding requirements. Fiduciary Liability covers claims that allege breach of discretionary duties; such as improper investment of plan assets. Employee Benefits Liability covers administrative errors such as not enrolling an individual in a health plan. ERISA bonds apply to fiduciaries illegally appropriating funds.
Special Note #1: Due to recent corporate scandals, Fiduciary Liability Insurance has become increasingly important. It is essential to properly coordinate this coverage with Directors & Officers Liability and Employee Benefit Liability.
Fidelity/Crime losses can also be devastating to a company. Crime Insurance protects organizations from loss of money, securities, or inventory resulting from a crime.
Common allegations include:
Special Note #2: Incidences of fraud and embezzlement are on the rise, even within companies with strong internal controls in place to prevent these types of claims.