Fiduciary Liability Insurance: How to Protect Your Staffing Agency

In the employee benefits system, there is a specific party that is especially susceptible to claims. This is the fiduciary, who primarily serves as the authoritative force managing employee benefit plans. Without proper Fiduciary Liability Insurance, employers who make use of fiduciaries in their benefits programs can be susceptible to many types of fiduciary liability claims, which include conflicts of interest, poor investment decisions, misappropriation of funds, improper administration of the benefits plan, and failure to reinsure the company’s insurance plans.

About Fiduciary Liability Insurance

As defined by IRMI, “Fiduciary liability insurance is a popular vehicle for the financial protection of fiduciaries of employee benefit plans against legal liability arising out of their role as fiduciaries, including the cost of defending those claims that seek to establish such liability. Most popular is a stand-alone form or separate fiduciary liability policy.” There are two main types of coverage – employee benefit liability (EBL) insurance and fidelity bonds. EBL insurance specifically cover claims that relate to misadministration of employee benefit plans, such as omitting employees from the plan, and is not involved with financial-based claims. Fidelity bonds are used in the event of dishonesty in the implementation of benefit plans, and only cover plan and its beneficiaries, not the fiduciary itself. Fidelity bonds are legally required under ERISA.


According to the United States Department of Labor, the Employee Retirement Income Security Act of 1974 is a federal law that was created to establish set standards for pension and health plans in order to better protect the individuals involved with said plans. It relates to fiduciary liability insurance because the law requires that all individuals or groups that have some level of control or authority over these plans will have fiduciary responsibilities, which include avoiding conflicts of interest and acting in the best interest of the plan’s beneficiaries. Any fiduciaries who violate the standards of ERISA will be held accountable.

Fiduciary Liability for Staffing Agencies

According to Assurance, there has recently been an increase in the number of staffing agencies purchasing fiduciary liability coverage. Assurance’s Vice President Kerri Quigley explained that while in the past fiduciary liability insurance primarily dealt with employee pensions (such as 401k plans), partially or fully self-funded health insurance plans are bound to ERISA’s standards, and the Affordable Care Act has led to an increase in minimum value health plans in staffing agencies. As these plans are tied to ERISA, they increase these agencies’ vulnerability to fiduciary liability claims, which makes fiduciary liability insurance all the more necessary to protect your agency.

About World Wide

For the last 50 years, World Wide Specialty Programs has dedicated itself to providing the optimal products and solutions for the staffing industry. As the only insurance firm to be an ASA commercial liability partner, we are committed to that partnership and committed to using our knowledge of the industry to provide staffing firms with the best possible coverage. For more information about how we can protect your staffing business, give us a call at 877-256-0468 to speak with one of our representatives.