Is liability insurance important for ERISA plan administrators?
The Employment Retirement Income Security Act (ERISA) requires that a fiduciary of an employee benefit plan act solely in the best interest of participants and beneficiaries. Fiduciaries can be held personally liable for any breach of their responsibilities. Recent studies indicate significant increases in claims severity and frequency over the past several years: The frequency of claims against fiduciaries increased threefold during the late 1990s. Plan fiduciaries now surpass the medical profession as a target for litigation. The average claim has surpassed $800,000up from $700,000 just five years earlier. Defense costs during this same period rose 471%. More than 90% of the claims are filed by plan participants. Unions, government agencies, and other entities make up the remainder. Nearly 50% of the claims arise out of benefits disputes.
