IRMI Update—Issue #196

An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
December 18, 2008

In This Issue

• Message from the Editor
• Risk Tip: Review Retirement Plans To Avoid ERISA Liability
• What's New in The Risk Report
• New Expert Commentary
• Get Practical for the New Year
• Please Share This Issue with Your Colleagues
• How To Subscribe/Cancel IRMI Update

Message from the Editor

Colleague,

This is our last issue of IRMI Update for 2008. It has been a tumultuous year, and we hope that the information we've provided in IRMI Update, IRMI.com, and our subscription reference services has helped you face the resulting challenges head on.

As the end of the year approaches, agents, brokers, and adjusters in many states need to obtain additional continuing education credit to keep their licenses. If you are among these, please take a look at the IRMI continuing education course curriculum. Here are some reasons why these online courses might be just what you need:

• Their quality is extremely high and will give you knowledge you can use to provide superior service to your clients.
• They are quite inexpensive.
• If you choose the CRIS program, you can obtain a certification that will enhance your credibility with contractor clients and prospects (and underwriters).
• You'll select from a broad spectrum of personal lines and commercial lines course topics.
• You can comply with most states' CE requirements for ethics, NFIP, or legal courses.
• You can take them at any time of the day on any computer connected to the Internet.
• Texas agents will even find online courses that meet the state's requirement for classroom learning.

There are other online CE courses on the Internet. However, I promise you will gain more valuable knowledge from IRMI courses than from the competition. If you are going to spend the time, why not seek knowledge that will enhance your job performance rather than simply meeting the basic state requirement? Learn more about our construction risk management and general insurance continuing education courses.

Thank you for subscribing to IRMI Update. Best wishes for happy holidays and a prosperous New Year.

Jack

Jack P. Gibson, CPCU, CRIS, ARM
President
International Risk Management Institute, Inc.

Risk Tip

Review Retirement Plans To Avoid ERISA Liability—If you sponsor a retirement plan, such as a 401(k) or 403(b) plan, always be aware that the Employee Retirement Income Security Act (ERISA) imposes significant responsibilities on anyone serving as a fiduciary for the plan, with the threat of stiff civil penalties as an incentive to comply. This is especially important to remember at a time when the stock market is in turmoil, and employees are anxiously checking their account balances.

Working with their investment advisers, plan fiduciaries should review the status of all investment vehicles in their plan, including the rating of all mutual funds, and document that review process even if no changes are warranted.

Fiduciary liability has expanded steadily over the past 2 decades through a series of court decisions interpreting ERISA. Despite all precautions, plan sponsors can be vulnerable to allegations of "wrongful acts" under ERISA and, at a minimum, incur the cost of defending themselves. Fiduciary liability insurance is designed to protect against this risk exposure. A related insurance coverage, employee benefits liability, protects against allegations of an error or omission in the actual administration of a benefits plan. Your insurance broker can provide information.

For employers who automatically enroll their employees in 401(k) or 403(b) defined-contribution retirement plans, the Labor Department's 2007 final regulations on "qualified default investment choices" under the Pension Protection Act of 2006 can be useful. By sticking to the qualified defaults for employees who do not direct their own investments, employers now are protected from fiduciary liability under Section 404 (c) of ERISA. The qualified default investment choices are: "life-cycle" funds, in which the asset mix is adjusted to reflect the number of years until the employee's expected retirement; balanced stock/bond funds; and professionally managed accounts—a diversified portfolio managed by an outside adviser.

By: William Henry, Vice President
The CIMA Companies, Inc.
Alexandria, VA

SUGGEST A RISK TIP: Send us a practical tip (less than 300 words) for identifying and managing risks, buying insurance, managing claims, or filling gaps in insurance coverages. Submit your IRMI Update risk tips. We'll acknowledge your contribution as we did for William.

What's New in The Risk Report

The December issue looks at the types of environmental insurance available—as well as the innovations to those products—fungus and bacteria exclusions, environmental risks in new construction, and common coverage pitfalls.

For IRMI Online subscribers

For SilverPlume Sage subscribers

New Expert Commentary

There are over 1,100 risk management and insurance articles on IRMI.com. Below you'll find summaries of some recent additions with links to the articles.

• Where Was Enterprise Risk Management?—Chris Duncan looks at what can we learn from the current financial debacle to make ERM more effective in the future.
• Credit Crisis and Insurance Companies—Jeff Balcombe discusses the impact of the recent economic turmoil on the valuation of companies operating in the insurance industry.
• Insurance Market Woes Continue—Pete Polstein bemoans the industry's lack of investment capital, failure of regulatory oversight, potential security-related E&O suits, and reinsurance problems.
• Opinion of Counsel after Broadcom v. Qualcomm—Sanford Warren shows why obtaining a validity or non-infringement opinion from counsel is a good idea.
• Things To Know about Captive Insurance Companies—Don Riggin provides a "CliffsNotes" style understanding of captives and their uses.
• Is Self-Administration Ever the Right Answer?—Glenn Brown explores the decision-making process along with the risks, possible rewards, and challenges of administering your own claims.
• Court Requires Comparables "Similarly Situated in All Respects"—Paul Siegel relates a case where, to prove employment discrimination, plaintiffs must show the comparator's misconduct be nearly identical to their own.

Get Practical for the New Year

Need help starting or fine-tuning a risk management program? Practical Risk Management from IRMI discusses the entire process from exposure identification through implementation and monitoring of the program. Includes tips on the best coverage options, and a quarterly newsletter with insight into emerging risks, new tactics, and trends. Order before January 1 and get individual IRMI Online access for just $209!

Please Share this Issue with Your Colleagues

If you haven't already done so, please send IRMI Update to your business associates. Thanks so much!

How To Subscribe/Cancel IRMI Update

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