Many Private Firms Remain Exposed to Fiduciary Liability Claims
Chubb Updates Loss Prevention Guide to Help Protect Companies from Litigation Trends
WARREN, NJ, November 6, 2006 – Two out of three private companies do not purchase fiduciary liability coverage, according to research commissioned by
the Chubb Group of Insurance Companies. Yet 20 percent of these companies plan to reduce or eliminate some employee benefits
this year, leaving themselves exposed to potential fiduciary liability lawsuits.
“Employees and retirees who see their pension savings and other company benefits wither away often respond by suing their
employers, benefits administrators and plan fiduciaries,” said Christine Dart, vice president, Chubb & Son, and assistant
fiduciary product manager, Chubb Specialty Insurance.
The Administrative Office of the U.S. Courts reported a 25 percent increase in the number of cases being filed under the Employee
Retirement Income Security Act (ERISA) from 9,167 in 2000 to 11,499 in 2004. According to an American Bar Association report, about 50 stock-related lawsuits alleging fiduciary violations have been filed in the past two years.
“In addition to purchasing adequate fiduciary insurance coverage, risk managers can help protect their company, benefits administrators
and plan fiduciaries from liability by implementing certain risk-mitigation steps,” said Dart.
Chubb’s Fiduciary Liability Loss Prevention handbook, which suggests step-by-step loss prevention procedures for publicly owned and privately held companies, has been
updated to reflect current fiduciary liability exposures. New sections address stock-drop litigation, “blackout” periods for
the sale of company stock and bundled services fees. The handbook can be found at www.chubb.com/businesses/chubb3331.html.
The member insurers of the Chubb Group of Insurance Companies form a multi-billion dollar organization providing property
and casualty insurance for personal and commercial customers worldwide through 8,000 independent agents and brokers. Chubb’s
global network includes branches and affiliates in North America, Europe, Latin America, Asia, and Australia.
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