Fiduciary liability (ERISA)
Cover for the liability of pension and benefit plan managers for breach of their duties.
Fiduciary liability insurance covers the personal liability of those who administer pension and benefit plans, for breaches of their duties of prudence, loyalty and diversification. The term often refers to the US ERISA framework, which imposes strict obligations on managers of corporate retirement plans and exposes them to actions by beneficiaries in case of mismanagement, excessive fees or inappropriate investment choices. Distinct from directors' liability in the broad sense, this cover protects a specific function at the crossroads of labor law, financial law and governance. Litigation has intensified around plan fees and, more recently, around the inclusion or conversely the exclusion of ESG criteria in investment choices, which creates new exposure for fiduciaries. For the underwriter, the quality of plan governance and the documentation of investment decisions are decisive factors.
Textbook case: the trustees of a corporate pension fund sued for keeping funds with allegedly excessive fees can be covered by their fiduciary liability cover.
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