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Vol. 1 No. 3, April 2004
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Fiduciary Focus
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The post-Enron focus on corporate scandals and corporate governance has been well-documented, as has the enormous exposure of directors and officers and their D&O carriers. Somewhat less known is the dramatic increase of exposure to plan fiduciaries and fiduciary liability insurers. The same cases that spawned massive securities class action cases have also frequently produced separate class actions brought on behalf of pension or other benefit plans and their employee beneficiaries who had invested in company stock.
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Several issues besides the massive damages alleged in these “ERISA class actions” are worth noting. First, the exposure is typically excluded from D&O coverage by virtue of the ERISA exclusion. Second, the test for who is a fiduciary under ERISA is a broad functional test, not one of title. Many of these ERISA class actions name numerous defendants who never dreamed that they were fiduciaries of benefit plans.
The exposure is real and significant. Last month Global Crossing announced a $325 million settlement of certain class actions. $80 million was attributable to the ERISA class actions.
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Darwin is now an active market to respond to this growing fiduciary liability exposure. Our focus is currently excess fiduciary coverage for publicly traded accounts (commercial and health care). Fiduciary limits of $10 million are available, and Darwin will consider stand-alone fiduciary coverage, fiduciary and D&O programs with separate limits, or programs with "tied" limits. Darwin will accept completed applications from the underlying primary insurer in considering excess placements.
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For more information, please contact your Darwin D&O underwriter.
Commercial Accounts:
Eric Berens
Joni Hill
Mark Vickery
Kristen Waldo
Health Care Accounts:
Stacy Cerruto
Kim Lloyd
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Forms
Excess Policy Specimen, E2000 (05/2003)
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