Management Liability for Financial Institutions

Healthcare Portfolio Fiduciary Liability Insurance

  • Tailored coverage backed by in-depth knowledge of the health care industry
  • Unparalleled risk management services
  • Superior claim handling

With Chubb’s Health Care Portfolio Fiduciary Liability Insurance policy, you get tailored coverage that is backed by in-depth knowledge of the health care industry, unparalleled risk management services, and superior claim handling.

Features & Benefits

Features

Fiduciaries of employee benefit plans are expected to act in the best interests of the plan participants. Under the Employee Retirement Income Security Act of 1974 (ERISA), if this duty is compromised, either intentionally or unintentionally, fiduciaries can be held personally liable for losses. Any employee who has discretionary authority over a plan or who assists in its administration can be a fiduciary and thus be exposed to liability. This list of individuals might include an appointed fiduciary, a plan administrator, a human resources employee, or any employee who helps to administer a plan.

ERISA also broadly defines the types of employee benefit plans for which fiduciaries are responsible, including pension plans and even health and welfare plans. These days, people who perceive that they have been wronged often react by filing lawsuits that can be extremely costly to defend and settle. This makes fiduciaries potential lightning rods for liability; particularly in light of the amount of money that is held in retirement plans today, the valuable protection that those plans afford to their participants, and recent efforts by many organizations to reduce participants’ retirement benefits. Moreover, designated fiduciaries are not the only targets of such lawsuits; targets can also include the employer and even the plan itself. Claims can be brought by:

  • Plan participants
  • Participants’ legal estates
  • Department of Labor (DOL)
  • U.S. Pension Benefit Guaranty Corporation

The most frequently alleged claims against fiduciaries include:

  • Denial or change of benefits
  • Breach of responsibilities or fiduciary duties imposed by ERISA
  • Administrative error
  • Negligence in the administration of a plan
  • Wrongful termination of a plan
  • Failure to adequately fund a benefit program
  • Cash balance plan conversions

Health care organizations can reduce the liability exposure to their fiduciaries by employing good loss prevention procedures, such as seeking and following the advice of independent experts; selecting diverse, financially sound investments; and so on. However, they cannot entirely eliminate their fiduciaries’ personal liability. Chubb’s Health Care Portfolio Fiduciary Liability insurance coverage helps fill the gaps.

Coverage

  • Duty-to-defend policy
  • Voluntary settlement program coverage
  • Definition of Insured includes the organization, its benefit plans, and its fiduciaries
  • Coverage is automatically extended to claims made against the insured person’s spouse or domestic partner for wrongful acts of the insured person
  • Definition of Administration includes:
    • Advising, counseling, or giving notice to employees
    • Producing plan interpretations
    • Handling records
    • Enacting enrollment
    • Terminating or canceling employees, participants, or beneficiaries under any plan
  • Definition of Employee includes part-time and temporary employees as well as volunteers
  • Definition of Claim includes a written demand for monetary damages, a criminal proceeding, formal administrative or regulatory proceeding, and a fact-finding investigation by the DOL, U.S. Pension Benefit Guaranty Corporation, or any similar authority located outside the United States
  • Coverage for civil money penalties relating to certain 502(i) and 502(l) claims
  • Employee benefit plan language includes certain plans defined in ERISA, plans not subject to ERISA that are sponsored solely by the insured for the benefit of its employees including fringe benefit plans and excess benefit plans, and new benefit plans being proposed, developed, or formed by the insured (excluding employee stock ownership plans)