Fiduciary Liability Insurance management is governed by the Employee Retirement Income Security Act (ERISA). New updates to ERISA regulations have shifted the Fiduciary Liability landscape. With these new complexities, it is especially crucial to stay informed about changes to the regulatory framework.
Updated Regulations
With today’s evolving human resources needs, several amendments were recently made to ERISA policy. These include, but are not limited to:
- Greater fiduciary responsibility to act sensibly in the interest of participants
- Detailed documentation of the decision-making process
- Present clearer and more detailed cost breakdowns
- Stronger data protection measures and cybersecurity frameworks
- Detailed documentation (with justification) of Environmental, Social, and Governance (ESG) investment strategies
Employers must follow these updated guidelines and ensure their plans comply with the new requirements.
Recent Claims Trends
Fiduciary Liability exposures stem from the failure to maintain employee benefit plans and improper management of retirement plans. The regulatory and legal environment continues to evolve, creating complex compliance challenges and emerging claim trends that employers must navigate. Employers must stay informed about these trends to mitigate risks effectively. The most prominent trends include:
- Excessive fee class actions: The number of cases is expected to increase in 2025.
- Plan forfeiture cases: There were more than 30 forfeiture-related suits filed in 2024.
- Pension Risk transfer: In the past year, plaintiffs have filed more than 10 cases challenging annuity provider selections.
- Tobacco surcharge cases: Several law firms alleged that plan sponsors violated ERISA’s anti-discriminatory provisions.
By understanding these emerging patterns, employers can develop deliberate strategies to protect their organizations from potential liability.
Summary
New ERISA regulations and rising litigation create immediate compliance challenges for employers. To avoid costly lawsuits, employers must implement stronger governance practices, maintain thorough documentation, and monitor compliance regularly. Acting now will protect your organization and better serve its plan participants.
Why Callahan Risk
At Callahan Risk, we monitor regulatory changes and market trends to provide the best service to our clients. With a product as highly specialized as fiduciary liability insurance, we value the importance of understanding nuances to ensure that your business is fully protected. Contact Callahan Risk today with any inquiries.
