Staffing Fiduciary Liability Insurance

Employers offering employee benefits are subject to legal liability under ERISA for errors and omissions that are made in administering such plans. There is liability for the plan itself, the employer sponsoring the plan and any fiduciaries of the plan. A fiduciary of the plan is one who exercises discretionary control or authority over managing and control of the employee benefit plan and is exposed to claims in this role.

Examples of Fiduciary Liability claims include:

  • Failure to maintain proper reinsurance for the company’s health insurance plan.
  • Misappropriate of payroll funds. Although, payroll is listed as a service fee, commingling of payroll dollars with service fees could be held in court as mismanagement in the event the company could not meet its payroll obligations.
  • Denial or change in benefits.
  • Conflicts of interest.
  • Imprudent investment decisions.
  • Errors in the administration of the benefits plan.

Fiduciary Liability insurance protects the company and company-appointed fiduciaries in the event of claims arising out of these types of claims. Typically coverage is purchased by those administering 401(k)s and other savings plans along with self-funded plans subject to ERISA. However, since the passage of the Affordable Care Act (ACA), many staffing firms have implemented minimum value plans that are actually partially self-funded and also open to fiduciary liability exposure.

Staffing firms purchase Fiduciary Liability policy to protect themselves against potential claims.