Escalating lawsuits and costly settlements are driving up the price of critical insurance coverages for retirement plan sponsors and other fiduciaries. Nonetheless, ERISA law experts stress the importance of securing both fiduciary and cyber liability insurance, and encourage seeking out affordable options.
Layers of Challenges
With excessive fee lawsuits hitting businesses of all sizes across the country, the U.S. Chamber of Commerce points out that there’s been an increase in the cost of fiduciary liability insurance—making it harder for plan sponsors and other fiduciaries to secure protection. The Chamber of Commerce also warns that as they confront the dual challenge of more lawsuits and more expensive insurance, retirement plan sponsors may be pressured to reduce or even eliminate employer contributions to retirement savings.
Despite the escalating cost of typical fiduciary liability insurance policies, experts at Groom Law Group and CAPTRUST say, “Doing without it would be a bad idea since your plan would potentially be exposed to uncapped liability in the event of litigation.” Even the allegation of a fiduciary breach can be a disaster, putting personal assets at risk, while defense costs of about $600 per hour wrack up. With litigation now also aiming at the intersection of ERISA law and cybersecurity, retirement plan sponsors and other fiduciaries have ever more need for protection. Cyber breaches can rapidly result in additional fiduciary breach allegations. According to the U.S. Department of Labor, “Responsible plan fiduciaries have an obligation to ensure proper mitigation of cybersecurity risks.” Among the DOL’s recommended best practices for doing so is putting in place a cyber breach response plan that prevents incidents from spiraling into disasters. In the face of rising risks and expectations, ERISA experts encourage all entities associated with retirement plan management and administration to seek out cybersecurity insurance:
It is worth noting that cybersecurity insurance is increasingly important to maintain even if it adds to the bill. Cybersecurity risks for benefit plans continue to grow, particularly in the current remote environment. Given the significant losses that may result from cybersecurity incidents, maintaining cybersecurity insurance has become more important than ever. Further, although it may not affect their own policy premiums, plan sponsors may wish to confirm whether recordkeepers and other service providers also maintain cybersecurity insurance.
Good to Know
Colonial Surety is here to help plan fiduciaries from businesses of all sizes secure affordable insurance protection. In fact, a whole year of our Fiduciary Liability Insurance costs less then just one hour with an ERISA legal expert if disaster strikes—and we even include Basic Cyber Liability Insurance with the policy!
Armed with this coverage, if you face claims of alleged or actual breaches of duty in connection with the employee retirement plan, you’ll be covered for defense costs and penalty limits up to $1,000,000. Plus, in the event of a cyber breach, your business—and plan—will receive support at every stage of incident investigation and breach response, including implementation of obligatory investigation and notification procedures. Coverage against lawsuits or regulatory actions related to the breach is included too.
For the greatest value, protection and convenience, go for our multi-year packages with locked in rates and installation payment options. Packages include:
- The required ERISA bondwhich protects the assets of the retirement plan from theft.
- Fiduciary Liability Insuranceto protect you and your assets from personal liability.
- Cyber Liability Insuranceto safeguard your company and plan from covered losses and expenses in the event of a cyber breach.
Colonial makes it so easy and speedy to secure this coverage that you can do it now, right here: Complete Plan Sponsor Package.
Serving customers since 1930, Colonial Surety is the trusted source for the pension industry to secure legally required ERISA bonds, fiduciary liability insurance and cyber-liability insurance. We help safeguard plan sponsors, pension professionals and financial advisors — and keep their businesses compliant — with pain-free, efficient, and friendly service every time.
Colonial Surety Company is rated “A Excellent” by A.M. Best Company, US Treasury listed and in business all across the country.