Presentation on theme: "Fiduciary Market Update"— Presentation transcript:
1 Fiduciary Market Update Jay Desjardins - Aon FSGRichard Haran - Chubb & SonRhonda Prussack - National UnionPLUS - Employment and Fiduciary Issues Symposium - April, 2005
2 Where Fiduciary Marketplace was Five Years Ago Low premiumHigh capacityLow frequency of claims/high severityFew underwriting demandsLow interest/little understanding
3 Where is Marketplace for Coverage Today? High frequency/high severityRestricted capacityPremiums have risen dramaticallyIncreased underwriting demandsIncreased intereste.g. Sessions at PLUS!!
4 What is Driving These Changes? Securities “Tag-Along” Suits” AirTouchAllegheny EnergyAmerada HessAIGAonAquila Inc. (fka Utilicorp United Inc.)AT&TBaxterBell SouthBristol-Myers SquibbCardinal HealthChevronCignaCMS Energy Corp.Computer AssociatesConsecoDuke EnergyDynegy, Inc.Electronic Data Systems (EDS)EnronGeneral MotorsGlobal Crossing Ltd.Goodyear Tire & Rubber Co.HarnischfegerHartford Financial Services Group, Inc.HealthSouthHoneywellHousehold InternationalIkonKmartKrispy KremeLucent Technologies, Inc.MarshMerck & Co.MirantMotorolaNortelPolaroidProvidian Financial Corp.Qwest CommunicationsRite AidRural MetroSchering PloughScientific-AtlanticSearsSouthern CompanyStone & WebsterSyncorTextronTyco InternationalUALULLICOWaste ManagementWilliams CompaniesWorldcomW.R. GraceXerox
5 Are There Any Other Factors Driving the Changes? Cash balance plansPension plan underfundingMutual fundsMiscalculation of benefits claimsCutbacks in retiree welfare benefitsDownsizingM&A activityOther stock claimsERISA 510 claims
6 How Are Insurers Responding? Insurers’ perspectivePricingTermsLimits
7 How Are Clients Reacting? Greater awareness/understanding of fiduciary issuesPurchasing habitsAdditional marketing
8 What is on the Horizon? In the courts IBM Supreme court’s decision on disparate impact (Smith v. City of Jackson)U.S District Court blocked the EEOC from allowing employers to reduce or eliminate medical benefits once participant becomes eligible for Medicare at age 65LegislationSOXWill market harden or soften?