Fiduciary Businesses and their Role
Fiduciaries play an important business role in our nation’s economy. They protect our country’s workers in the present and in the future by managing health care plans, overseeing pensions, handling employee savings and profit sharing programs, and generally maintaining employee financial welfare plans to insure they are operating at their optimal level.
Such an important, and strategically valuable role, however does open fiduciaries to certain liabilities not often faced by other business. Whether mismanagement practices are real or perceived, a fiduciary that is litigated faces long and costly court battles and expenses that could ultimately cause irreparable damage to the fiduciary. Additionally, if publicly traded, a fiduciary may face deteriorating stock prices in the face of litigation related to their best practices for asset management.
What is Fiduciary Liability Insurance
Historically, liability claims against fiduciaries increased substantially following the passage of the Employee Retirement Income Security Act of 1974, also known as ERISA. ERISA’s fundamental goal is to protect employee pension and benefit plans and the interests of those plan’s beneficiaries. If your business is a fiduciary enterprise that manages or provides administrative support for the oversight of employee financial benefits and programs, it is imperative that you protect your company with Fiduciary Liability Insurance.
Protections offered through Fiduciary Liability Insurance include not only the coverage of financial expenses and legal expenses resulting from claims or litigation, but also the protection of personal and professional assets should a claim be successful and result in damages.
Next Steps for Obtaining Fiduciary Liability Insurance
The coverage each individual fiduciary company requires from Fiduciary Liability Insurance is variable and based on their daily business operations, asset volume, and other areas of exposure. Meeting with an informed, professional, and client-focused insurance agent, with expertise in and thorough understanding of Fiduciary Liability Insurance and exposures that may result through ERISA laws, is vital.