Products August 17, 2021

Colonial Surety Launches Fiduciary, Cyber Liability Protection Package

The protection provides coverage for the costs of legal services, computer forensic services, public relations and crisis management expenses, and more.

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Colonial Surety, a direct and digital insurer, has expanded its fiduciary liability product offering for plan sponsors with a new, two-part package that includes cyber liability coverage.  

The new package offers fiduciary liability insurance for plan sponsors, protecting assets from claims of fiduciary breach, as well as cyber liability coverage to safeguard employees’ personal data and assets against cybersecurity threats.

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“The guidance issued by the DOL [Department of Labor] in April is a clear statement that it sees cybersecurity as a key fiduciary responsibility for all plan sponsors. Businesses now have no choice but to be proactive about protecting the privacy and personal information of their retirement plan participants,” says Wayne Nunziata, president of Colonial Surety.

“At Colonial Surety, we have long understood that cybersecurity is both a significant risk and a major blind spot for many 401(k) plans,” he adds. “Our new package allows us to support plan sponsors with comprehensive, cost-effective cyber liability solutions, and we will continue to encourage the wider industry to adopt cyber liability protection as a best practice for all businesses.”

The new fiduciary-and-cyber liability package includes coverage that protects the assets of the retirement plan sponsor, and the personal assets of individuals involved in the management of the plan, from exposure in the event of a lawsuit alleging breaches of fiduciary duty. Additionally, the cyber liability protection included in the package protects businesses and their pension plans from covered losses and response expenses in the event of a cyber breach.

In particular, the built-in cyber liability protection provides coverage for the costs of legal services, computer forensic services, public relations (PR) and crisis management expenses, notification services, call-center services, credit-monitoring, and identity-monitoring or other personal fraud or loss-prevention solutions. It also includes defense and indemnity from covered lawsuits by third parties.

The new fiduciary-and-cyber liability package can be found on Colonial Surety’s online platform and is available to any company that sponsors a retirement plan and already has an Employee Retirement Income Security Act (ERISA) bond in place. It complements Colonial’s existing ERISA Package, which includes fiduciary and cyber liability coverage, alongside Colonial’s own ERISA bond.

Compliance August 17, 2021

Xerox Hit With ERISA Suit Alleging Excessive Fees

The complaint claims participants overpaid millions of dollars to Xerox’s recordkeeper from 2015 through 2021.

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Participants of the Xerox Corp. 401(k) Savings Plan have filed an Employee Retirement Income Security Act (ERISA) lawsuit against Xerox Corp., its plan administration committee and various individual defendants alleging imprudent recordkeeping fees.

The plaintiffs say the defendants used its in-house recordkeeper and passed Xerox’s fees on to the plan’s participants. Xerox HR Benefit Services, a wholly owned subsidiary of Xerox, was hired as the plan’s recordkeeper in 2013, according to court documents. The plaintiffs, which include current and past participants of the 401(k) plan, allege Xerox’s fees were “well above reasonable market rates” from the beginning of the arrangement.

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According to the complaint, the the defendants failed to “prudently and loyally oversee the plan’s recordkeeping service provider, and instead used the plan to promote Xerox’s own business interests.”

The plaintiffs claim that under Xerox HR Benefit Services, recordkeeping expenses in the plan more than doubled from $54 per participant in 2013 to $136 by 2019, the last year for which data is available, despite recordkeeping costs in the market declining overall in that time. The defendants switched to an unaffiliated recordkeeper earlier this year.

Xerox’s recordkeeping business was spun off into Conduent Human Resource Services in 2017, and Conduent was the plan’s recordkeeper until 2021. The plaintiffs claim that retaining Conduent as the plan’s recordkeeper was financially beneficial to Xerox, which “retained significant equity in Conduent after the spinoff, and thus benefited financially from actions which were beneficial to Conduent,” according to the complaint.

“By retaining the services of an affiliated recordkeeper and failing to engage in a prudent investigation of other service providers in the marketplace, the defendants allowed the plan to pay as much as four times more than what the plan would have paid in the open market for recordkeeping services of comparable or superior quality,” the plaintiffs said in the complaint. As a result, the complaint claims participants overpaid millions of dollars in excessive fees from 2015 through this year.

The plaintiffs assert claims against the defendants under ERISA for breaches of the fiduciary duties of loyalty and prudence, and against Xerox for failure to monitor fiduciaries.

In an email to PLANADVISER, Xerox said it was unable to comment on pending litigation. 

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