Whatever industry you operate in, you face risk from a number of sources.
While an organization and its executives have an ongoing responsibility to meet external stakeholder needs, it is critical that they protect the interests of internal stakeholders and employees as well.
All organizations require their executives to operate with a high level of fiduciary care as representatives of the organization, particularly with respect to protecting its employees and their benefit plans. The health and financial well-being of employees is of utmost importance — whether maintaining well-funded retirement plans or providing choices for key health benefits components.
Understanding Your Fiduciary Liability Needs
If your company offers and oversees the administration of employee benefit plans, it is important to protect the organization and individuals from potential claims that can arise in the event that a plan fiduciary or its departments makes an error in the day-to-day administration of these plans.
Work to protect your organization’s interests, bottom line and employees with a fiduciary liability insurance policy designed to shield your business from claims of mismanagement and the legal liability arising out of your and your responsible actors’ roles as fiduciaries.
There are a number of issues that can prompt a fiduciary liability policy to respond. Delivering inaccurate advice or alternatives for employees when the company uses a third-party to manage defined benefit or defined contribution plans could lead to a suit for negligent investment practices. This could include failure to offer adequate diversification options, charging excessive fees or acting in a way that presents a conflict of interest, as well as breaches of the Pension Benefits Act. Additionally, there might be errors during the design phase of the benefit plan which could also result in a loss for the employee and result in a claim.
Fiduciary liability insurance policies not only help protect your company and leadership against fiduciary mismanagement but can also work to insulate you in case of alleged:
- Wrongful denial or improper change in benefits
- Errors or omissions in plan administration
- Settlor liability
- Improper advice or counsel
- Failure to administer the plan according to plan documents
- Conflicts of interest and prohibited transactions
In the event of a claim, your fiduciary liability policy normally covers all your legal defense costs, all settlements negotiated, damages awarded by the court when there’s a finding of wrongdoing and investigations into the alleged wrongdoing.
Protection against the perils of a breach of responsibilities – intentional or not – and the dangers of bad actors is a must in today’s world. Personal assets, corporate assets and your company’s reputation are all at stake.
Don’t risk leaving your company exposed in the event of a claim. Work with NFP’s fiduciary liability specialists today and keep your company protected.