For the past several years, the fiduciary insurance market has been especially challenging for both insurers and sponsors of defined contribution (DC) plans.
Insurers have faced more frequent and severe fiduciary claims, mostly around excessive fees and investor imprudence, and paid out tens of millions of dollars in settlements since 2020. The plaintiffs’ bar has been experiencing some recent early and big wins, with a very low percentage of cases being dismissed. This significant uptick in litigation, along with sizable defense costs, are driving many insurers to evaluate their profitability and exposure. As a result, many are substantially increasing both liability insurance premiums and self-insured retention (SIR) rates for plan sponsors.
There is also increased scrutiny on programs before insurers decide to underwrite a risk. Many insureds are requiring extensive documentation from DC plan sponsors that they are meeting their fiduciary responsibilities under the Employee Retirement Income Security Act of 1974 (ERISA).
In this paper, Marsh & Mercer specialists discuss the challenging fiduciary liability insurance market that is affecting companies across all industries and of all sizes.
