New York City ~ April 10-11, 2006

2006 Employment Practices 2006 Employment Practices & Fiduciary Liability & Fiduciary Liability

SymposiumSymposium

Spotlight on Fiduciary Liability: Spotlight on Fiduciary Liability: Evolving TrendsEvolving Trends

What a Client Should KnowWhat a Client Should Know

April 11, 2006

∫∫

Spotlight from Different Spotlight from Different AnglesAngles

• Carrier’s Perspective

Matt Shulman, Vice PresidentHartford Financial Products

• Claims/Defense Perspective

Martin Ween, Esq., PartnerWilson Elser Moskowitz Edelman & Dicker LLP

• Broker’s Perspective

Jenina Schiller, Sr. Vice President & Product LeaderWillis of New York

The Focus of Our SessionThe Focus of Our Session

• Coverage Triggers – Who, What is covered Reporting provisions – Ensuring policy

compliance• Corporate Governance – How to differentiate

one client from another• Market Options – In a firming marketplace;

what is available?

Q. Who Is Covered?Q. Who Is Covered?A. Not just ERISA plansA. Not just ERISA plans

• All ERISA plans

• Health & Welfare Benefit plans

• Non-qualified plans in U.S.

• Foreign plans

• Workers Compensation, Government Mandated programs, Severance Pay plans

Beware of Those Carrier Beware of Those Carrier ApplicationsApplications

• Not all applications are alike• Some carrier apps on new and

renewals require full plan listing! • Omnibus on Health & Welfare Benefit

plans• Usual protocol is to provide 5500’s,

Financials, & Investment Portfolios on top 5 plans – as approximately 85% of these hold major assets

Beware of Those Carrier Beware of Those Carrier ApplicationsApplications

• Beware! An incomplete listing can create a gap!

• Carrier flexibility required

• Potential for denial of coverage

No. 1 Reason for a Coverage No. 1 Reason for a Coverage Gap: Failure to Report a Claim Gap: Failure to Report a Claim

or NOCor NOC

• When should I report a claim?Concentrate on the Notice Provision

• All policies have basic Claims Reporting & Circumstance Provisions

• Designated Individual Risk Mgr. or Gen’l Counsel/Tailor Provisions

• Actual hard, bona fide claim easier?

No. 1 Reason for a Coverage No. 1 Reason for a Coverage Gap: Failure to Report a Claim Gap: Failure to Report a Claim

or NOCor NOC

• Notice of Circumstance – which may give rise to a claim

• When failure to give Notice of Circumstance comes back to bite – Raytheon proof!

• ERISA Tag-along filed after D&O claim/Carriers denied claim due to Prior notice provision in policy

• Overlapping EBL (under CGL) – duly report under both policies

Other Claims BubblingOther Claims Bubbling

• Increased activity in Severance Pay (Hewlett Packer)

• Executive Compensation Plans – Straddling D&O/Fiduciary areas – Rising defense costs, legal fees, interest, etc.

• Increased actions brought by DOL, PBGC, and IRS

WHATWHAT Is Actually Covered? Is Actually Covered?

• Definition of Claim Formal investigations, audits

• Clients typically may not notify as a claim – no allegations

• Investigative agencies: correct them or dismiss them

• Premise: good companies bring in professionals during audit process

• Breach of fiduciary duty

Audits/CAP ProgramsAudits/CAP Programs(Voluntary Compliance Programs Offered (Voluntary Compliance Programs Offered

by Carriers)by Carriers)

• Coverage hurdles for carriers’ defense

The Struggle to The Struggle to Differentiate Our ClientsDifferentiate Our Clients

Corporate Governance No Employer Securities No freezing of plans No cash balance conversions Full funding levels Premiums still high! Retentions on the rise!

What Are Clients’ Options What Are Clients’ Options Today?Today?

• Go bare! (not likely)

• Coordinate with D&O limits – No tie-in

• Separate Employer Securities retention

• Review A-Side policies

• Coordinate with EBL

• Structure Excess/Umbrella limits (sharing over multi ER lines)