Skyrocketing Premiums for ERISA Fiduciary Liability Policies

Jill Ellswick for BenefitNews.com reports: “Scandals spur fiduciary liability premiums.” According to the article which reports on the results of a survey of the Risk and Insurance Management Society (RIMS), premiums for ERISA fiduciary liability insurance spiraled by 43% from 2001 to 2002 and rose 22% during the first quarter of this year. The article quotes John Coonan, vice president and fiduciary liability insurance product manager for Chubb Specialty Insurance, as saying that fiduciary lawsuits under ERISA are on the rise. The article also comments on how the parallel lawsuits under ERISA and the securities laws (discussed previously here) are “worrisome to underwriters” since liability exposure is basically doubled for what amounts to the same set of facts. The article comments on the exclusions which are becoming more common to mitigate risk, one of which is an exclusion for “fiduciary violations voluntarily disclosed to the Internal Revenue Service.” (Does the article mean “fiduciary violations voluntarily disclosed to the DOL” since fiduciary violations are generally disclosed to the DOL under the Voluntary Fiduciary Correction Program, and not the IRS? Or does it mean plan compliance violations disclosed to the IRS under EPCRS–which may or may not involve fiduciary violations?)