PENSION SCHEME AND BENEFIT PLAN LIABILITY BROKER FACTSHEET Chubb is a leading provider of pension scheme and benefit plan liability insurance. Chubb’s specialist cover insures pension schemes and other benefit plans, trustees thereof, corporate trustees, companies, directors, officers and employees for legal liability from claims and prosecutions against them for wrongful acts in respect of the operation of benefit plans. It also insures them for representation costs in benefit plan-related investigations of them by regulators. Why do your clients need pension scheme and benefit plan liability insurance? • Many trustees running schemes are volunteers. Whether a volunteer or not, the obligations placed on them are significant and can attract personal liability • The law requires those involved with plans to be familiar with all relevant scheme documentation including the deed, rules, and statement of investment principles. Such obligations are onerous, and even the most conscientious can make a mistake or get caught out by frequently changing laws • The Pensions Regulator can take action against trustees who commit breaches of trust or against those who have breached pensions law Policy Offering Cover for pension schemes and other benefit plans, trustees thereof, corporate trustees, companies, directors, officers and employees against: • Wrongful acts, errors or omissions (including administrative error, misstatement, denial or change of benefits, improper advice, misleading disclosures, conflicts of interest, imprudent investment of scheme assets, violation of scheme documents, default on an obligation to contribute to the plan) • Breach of duty • Breach of trust Limits •Up to £15 million (flexible options are available on limits) Appetite We like to insure We are cautious of 4 Organisations of any size with employee benefit plans of different types, including: - pension schemes - death in service scheme - employee share ownership plan - education, training, medical or unemployment plans 4 Financially sound organisations 4 Local, national and multinational companies • • Pension schemes which are being assessed for acceptance, or have been accepted, into the Pension Protection Fund Organisations who are financially poor and that have significant pension deficits Why Choose Chubb? 4 Unique and broad covers. Pension trustee liability policies will often only cover claims against trustees. The Chubb policy covers scheme and plan trustees, plus the sponsoring company, as well as corporate trustees and a whole range of additional insureds. The Chubb policy is one of the broadest policy wordings available, and provides comprehensive protection in an increasingly complex and perilous liability environment 4 Expertise. The Chubb Group of Insurance Companies has more than 30 years of pension scheme liability insurance experience 4 All risks policy with no warranties or basis of contract clauses. 4 Highest AM Best rating. This indicates Chubb’s financial strength and long-term ability to pay claims 4 Award winning claims service. Chubb’s claims team is consistently acknowledged as the best in the market Key Selling Points Cover/ Service Benefit Cover for wrongful acts during the winding-up of a plan 4 It is becoming increasingly common for sponsoring employers to change their employees’ pension provision, including winding up schemes. Unlike many other insurers, Chubb provides cover during the winding-up period, ensuring your client is protected from start to finish. Cover for missing beneficiary claims 4 Many insurers provide an exclusion in respect of claims by missing beneficiaries. Chubb recognises this is a common and critical exposure and provides cover as part of the standard policy offering. Cover for auto enrolment exposure 4 Many insurers do not provide cover for the actual breaches in the legislation. The duty to enrol employees into a pension scheme of some sort is not a duty, breach of which would be covered by a standard policy. The Automatic Enrolment Provisions do not create a statutory duty to the employees. Therefore, if an insured organisation breaches the provisions, employees cannot sue for the breach. Chubb provides this cover as standard. No warranties or basis of contract clauses 4 Chubb has not had these for many years. This gives greater peace of mind to a client, knowing upfront that there are no basis clauses or warranties that may trip them up whilst making a claim. Cover for emergency defence costs 4 Unlike many insurers, Chubb allows emergency defence costs to be incurred without consent. It enables the client to proceed where, due to the emergency, they cannot request immediate approval from Chubb. Cover for civil fines and penalties imposed by the Pensions Regulator and Pensions Ombudsman 4 Increased inspection by regulators has led to an increase in fines and civil penalties. Chubb’s policy will ensure your client is covered against such payments. Cover for media costs 4 Chubb’s policy will cover the costs of a public relations consultant to work with the insured and publish the successful outcome of a claim. This added feature can potentially offset any damage to your client’s reputation. Cover for court attendance and staff disruption 4 Chubb offers compensation for staff time attending court and lawyer interviews, payable directly to the policyholder. Loss minimisation service (“ForeSight by Chubb”) 4 Chubb aims to prevent a loss before it happens. ForeSight by Chubb is a loss minimisation service with access to a leading law firm (subject to time limits). Case Studies Error in administration After taking professional advice, the trustees moved investments in an attempt to enhance returns. They were also trying to reduce investment risk, but later, independent, legal advice concluded that the investments were high risk, insecure and unwise. Subsequent losses, along with exit costs incurred, led to suggestions of negligence on the trustees’ part. Alleged poor investment strategy A scheme member left her employers, at which point she became a deferred member of their pension scheme. The scheme trustees advised her to transfer her value in the scheme to an additional voluntary contribution fund. They said that this would ensure that her annual pension at normal retirement age would be higher. But it transpired that she should have stayed in the scheme as a deferred member. Some years later, she noticed the shortfall in her benefits. The same advice had also been provided to other scheme members. The Chubb Advantage Lawyers were instructed to investigate and counter the suggestions. Because of our experience in these types of claims we were able to understand the issues and confirm coverage at an early stage. Subsequent legal defence costs and damages exceeded £1,000,000. The Chubb Advantage Under some market contracts, only the claims against the trustees would be covered. Many grievances are not personalised against the trustees and will target the company which provides the benefit plan. In this case, the sponsoring employer was targeted along with the trustees but the breadth of the policy led to all of the defence costs and settlements of over £250,000 falling for cover under the policy. Contribution claim A trustee company issued a claim against their adviser alleging that they failed to properly advise on the financial impact on the plan of granting early retirement without actuarial reduction. The trustee asserted that, had it received the relevant advice, it would not have consented to further early retirements and would have withdrawn consent to those applications made. The adviser stated that such advice was provided to a director of the trustee company and it was assumed that the advice was provided to the other trustees. The adviser issued a part 20 contribution claim against the director of the trustee company. The Chubb Advantage Because of the broad nature of the definition of who is insured under the Chubb policy, coverage was confirmed for the claim. Subsequent defence costs incurred of over £300,000 were paid under the policy. Also available Chubb has a broad package portfolio that can be combined with pension scheme and benefit plan insurance including: • Employment practices liability • Directors and officers liability • Crime insurance • Corporate legal liability • Kidnap, ransom and extortion expenses Chubb also offers comprehensive commercial and accident and health cover Contact us For more information or to obtain a quote please call your local underwriting or sales contact. For all contacts, visit www.chubb.com/uk/marketinglibrary/contact BEST FOR FINANCIAL STRENGTH A++ Superior AM Best’s highest rating for financial strength BEST OVERALL SERVICE Insurance Times Broker Survey Winner: 4 times in the last 5 years BEST QUALITY OF COVER Insurance Times Broker Survey Winner: 4 times in the last 5 years BEST CLAIM SERVICE Insurance Times Broker Survey Winner: 4 times in the last 5 years A quality approach for 130 years Chubb’s winning performance reflects the disciplined application of a clear long-term strategy, regardless of the business cycle: ... employ and empower top quality underwriters; ... focus on attractive specialisms; ... offer the best niche covers in the market. Post Magazine, 2012 chubb.com/uk 120 offices in 26 countries Choose certainty. Choose Chubb. Commercial | Financial Lines | Chubb 1882 at Lloyd’s | Accident & Health | Private Clients This information is descriptive only. The precise cover provided is subject to the terms and conditions of the policy as issued. For promotional purposes, ‘Chubb’ means member insurers of the Chubb Group of Insurance Companies. For the purposes of training and monitoring our service, some telephone calls may be recorded. CHUBB INSURANCE COMPANY OF EUROPE SE, a European company incorporated in England and Wales and registered under Company Number SE13. CHUBB MANAGING AGENT LTD, a company incorporated in England and Wales and registered under Company Number 7116876. Registered Offices: 106 Fenchurch Street, London EC3M 5NB, England. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. © Chubb Insurance Company of Europe SE 2013 F11 12/13
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