Fiduciary Liability Finds Its Footing, But Risks Remain

Fiduciary Liability Insurance Market Snapshot

Additional new carriers entering the fiduciary marketplace have increased competition, created slight decreases in pricing, and, in some cases, reduced retentions. The majority of renewals have seen flat pricing with no restrictions on coverage, and a marketplace willing to offer coverage enhancements to remain competitive in an expanding, changing market.

Here are some of the fiduciary liability trends, issues, and considerations we are currently seeing.

Excess Fee Litigation

Excessive fee litigation has been the biggest concern for both carriers and underwriters for several years. Cases and settlements have declined significantly from their 2022-2024 peak. If this trend continues, the market should stabilize, but a rise in filings or settlements could reverse progress and lead to higher rates, retentions, and more restrictive terms.

Nonprofit Litigation

Defined contribution plans for nonprofits are seeing increased carrier awareness of even smaller plans of less than $250M, as plaintiff firms have been focusing recent litigation in this newer direction. Several larger risks in this class of business will even find carriers unwilling to entertain their coverage unless the account has a comprehensive risk management program and an RFP process.

Litigation-Ready Planning

Many companies have successfully used detailed risk management plans and clear RFP procedures in their health and welfare procurement processes to counter potential excessive fee litigation and secure more favorable fiduciary rates. Areas of interest to underwriters and carriers include fund plan fees, vendor fees, complete recordkeeping fees, welfare plan pharmacy fees, plan performance, detailed benchmarking information, and governance as compared to their peers. Other areas reviewed include the quality and reputation of all third-party professional firms involved, and a written, detailed plan for their hiring and RFP selection processes.

Litigation Trends to Monitor

Trends to monitor in 2026 include excessive fee litigation filings and settlements, 401(k) forfeiture litigation, voluntary benefits litigation focusing on critical illness, hospital indemnity, and accident and cancer insurance. Others include tobacco and nicotine surcharges involving wellness programs; outdated mortality table litigation; cyber program audits; and environmental, social, and governance investing.

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The above information does not constitute advice. Always contact your insurance broker or trusted advisor for insurance-related questions.