Fiduciary Liability Insurance
Learn how your organization can benefit from fiduciary liability insurance.
What is Fiduciary Liability Insurance?
Fiduciary liability insurance primarily serves to protect employee benefit plan fiduciaries – individuals with discretionary authority for the management or administration of an employee benefit plan subject to the U.S. Employee Retirement Income Security Act (ERISA) or who exercise authority or control in managing or disposing of its assets (plan fiduciaries).
The insurance, which also protects sponsoring organizations, covers, in general terms:
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Company/Sponsor
The company/sponsor organization and its subsidiaries.
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Covered Plans
Covered plans, including: qualified plans (e.g., welfare and pension) and non-qualified plans (e.g., deferred compensation programs, supplemental executive retirement programs, top-hat plans for highly compensated individuals.
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Insured Persons
Any natural person serving as a past, present or future director, officer, partner or employee of the sponsor organization or of a plan in their capacity as a fiduciary, administrator or trustee of a plan.
Why is Fiduciary Liability Important?
Your Personal Assets May Be on the Line
Under ERISA, plan fiduciaries are personally liable for fiduciary failures, meaning their personal assets could potentially be at risk. In a worst-case scenario, even bankruptcy won’t provide protection.
An ERISA Bond Doesn’t Protect from Breaches of Fiduciary Duty
Under ERISA, plan fiduciaries and those who handle plan funds or assets must be bonded. But while these ERISA fidelity bonds offer protection to the plan from losses caused by dishonest or fraudulent actions, they do not protect from losses arising from breaches of fiduciary duty (such as the failure to invest plan assets prudently) or plan administration errors. These require specific fiduciary liability insurance.
What Claims are Addressed by Fiduciary Liability Insurance?
- Breaches of fiduciary duty, including violations of fiduciary obligations, responsibilities or duties under ERISA and similar laws worldwide (where permissible)
- Administration, including acts, errors or omissions in the administration of a plan, such as: advising, counseling or giving notice to employees, participants and beneficiaries; providing interpretations; handling records; activities affecting enrollment, termination or cancellation of employees, participants and beneficiaries under the plan
- Actions taken in a settlor capacity
How Aon Can Help
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Broad Coverage Terms
Specially negotiated coverage enhancements are designed to provide broad coverage for our clients. Using our advanced claims data and analytics, our brokerage and claim teams work together to help inform coverage negotiations. Aon’s claims team has handled over 500 fiduciary liability claims in the last five years, including those involving excessive fees, employer stock drop and improper employee stock ownership plan valuation allegations.
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Data and Analytics
Aon provides benchmarking data, such as pricing data on program limits and retentions. It can be customized using a wide array of parameters, including public vs. private, industry sector and total retirement plan assets.
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Education and Updates
Claims and industry expertise provides insight into the latest changes in the legal environment, recent settlement and verdict trends and statistics and the evolving state of available coverage terms. Aon’s Wealth consultants also advise on fiduciary best practices.
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500+
Aon’s claims team has handled over 500 fiduciary liability claims in the last five years, including those involving excessive fees, employer stock drop and improper employee stock ownership plan valuation allegations.
