Liability Insurance for ERISA Plan Sponsors: Minimizing Financial Risks During the Pandemic and Economic Downturn

Description

Amid the pandemic and shifts in the economy, companies and their employees face significant economic challenges. Companies must assess and consider the risk of claims related to their sponsorship, oversight, or administration of an employee benefit plan and determine whether liability insurance may be available to minimize financial risk.

The COVID-19 pandemic has forced businesses to downsize. Also, the volatility in the financial market negatively impacted investment funds holding employee benefit plan assets, resulting in significant losses to plan beneficiaries. The DOL and the IRS issued several regulations providing relief for benefit plans but present administrative challenges for plan sponsors and administrators.

Plan sponsors, the plans themselves, and third-party administrators providing financial or consulting services to employee benefit plans face a risk of liability under ERISA. Several causes of action for breach of fiduciary duty can arise, such as administrative errors causing lost benefits, failure to monitor service providers, negligent investment practices, and other actions negatively impacting plan beneficiaries.

ERISA plan sponsors and fiduciaries will find it prudent to have sufficient liability coverage in place to protect against a host of potential claims. EBL insurance protects plan sponsors from damages arising from the administration of employee benefit plans. It may provide coverage for claims denied under exclusions for employment-related practices in CGL policies and not covered under fiduciary liability policies.

Listen as our panel of employee benefits attorneys and insurance professionals explains best practices for assessing coverage under EBL, fiduciary liability, and CGL policies. The panel will help benefits counsel assess plan sponsors' EBL coverage for potential claims and offer strategies for countering insurers' denial of coverage for claims.