By Mary Byrnes, AAI-M, AU, Director of Education
Having worked in commercial lines for almost all of my adult life, I realized that there are just some coverages that sell themselves, if they’re explained correctly. The “Management Liability” class of coverages fit that bill. There are cases that are so newsworthy, that they’re instantly recognizable by anyone. If you hear Bernie Madoff or Enron, you know exactly what the issue was. Most insureds think that because they’ve got crime or GL coverage that they’ve got it covered, but they are sooooo wrong!
Did you know that if your insured has a 401K program for their employees and they have the plan administered by a third party fund manager, your insured can still be personally (yes PERSONALLY) liable? Back to Bernie Madoff. There were plenty of third party fund managers who placed the 401K and pension plan funds in investment programs with Bernie Madoff, after all, it looked good on paper and showed a great return. You know the rest of the story, it hit the fan in a big way. You may know someone who lost their pension due to this situation. Here’s where it hits home…If the CEO of your insured picked the fund manager, and something goes very wrong, (like the fund manager totally mismanages it, leaves town with it etc), your insured’s CEO picked the fund manager. The CEO is personally liable for the decision and the fall out. Scary stuff for an insured and for the agent if the appropriate coverage hasn’t been discussed with the insured.
Find out about Directors & Officers (D&O), Employment Practices Liability (EPLI), Fiduciary Liability (FLI), & Employee Benefits Liability (EBL) in our upcoming webinar. Chris Amrhein will guide you through what each of these coverages does. You can’t really control what your insureds do from a management standpoint, but you can save the day with the right coverages.
I’ll be there too!