Benefit plan sponsors can be held personally liable for mismanagement of an ERISA-qualified plan. Fiduciary liability insurance can provide protection.
The Employee Retirement Security Act (ERISA) regulates the management of employee benefit plans for the protection of plan participants. Plan sponsors of benefit plans may not realize they can be held personally liable for mismanagement of an ERISA-qualified plan. Claims can be brought by plan participants and government agencies for a variety of reasons including
• administrative errors,
• failing to comply with policy terms,
• underpaying medical benefits,
• improper termination or enrollment,
• administering improper plan advice,
• failing to enroll in a healthcare plan, and
• falling victim to a cyber breach of personal information.
Fiduciary liability insurance protects employers against many claims of plan mismanagement. Without such protection plan sponsors can incur tens of thousands of dollars in litigation and settlement costs.
“We’re seeing an uptick in these types of claims, particularly in the area of cybersecurity. As hackers become more sophisticated and prevalent, they are targeting benefit records for personal information such as Social Security numbers and dates of birth,” said Dan Bukaty, president of Bukaty Property & Casualty Services. “Retirement accounts are vulnerable to breaches that actually result in stolen funds from personal accounts. When these unfortunate incidents occur lawsuits are common and employers are vulnerable.”
More information on fiduciary liability, examples of claims that can be filed against a plan sponsor, and how coverage may be an asset to you can be found here, or by contacting Dan Bukaty at 913.647.3941.