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Fiduciary Market Update

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Presentation on theme: "Fiduciary Market Update"— Presentation transcript:

1 Fiduciary Market Update
Jay Desjardins - Aon FSG Richard Haran - Chubb & Son Rhonda Prussack - National Union PLUS - Employment and Fiduciary Issues Symposium - April, 2005

2 Where Fiduciary Marketplace was Five Years Ago
Low premium High capacity Low frequency of claims/high severity Few underwriting demands Low interest/little understanding

3 Where is Marketplace for Coverage Today?
High frequency/high severity Restricted capacity Premiums have risen dramatically Increased underwriting demands Increased interest e.g. Sessions at PLUS!!

4 What is Driving These Changes? Securities “Tag-Along” Suits”
AirTouch Allegheny Energy Amerada Hess AIG Aon Aquila Inc. (fka Utilicorp United Inc.) AT&T Baxter Bell South Bristol-Myers Squibb Cardinal Health Chevron Cigna CMS Energy Corp. Computer Associates Conseco Duke Energy Dynegy, Inc. Electronic Data Systems (EDS) Enron General Motors Global Crossing Ltd. Goodyear Tire & Rubber Co. Harnischfeger Hartford Financial Services Group, Inc. HealthSouth Honeywell Household International Ikon Kmart Krispy Kreme Lucent Technologies, Inc. Marsh Merck & Co. Mirant Motorola Nortel Polaroid Providian Financial Corp. Qwest Communications Rite Aid Rural Metro Schering Plough Scientific-Atlantic Sears Southern Company Stone & Webster Syncor Textron Tyco International UAL ULLICO Waste Management Williams Companies Worldcom W.R. Grace Xerox

5 Are There Any Other Factors Driving the Changes?
Cash balance plans Pension plan underfunding Mutual funds Miscalculation of benefits claims Cutbacks in retiree welfare benefits Downsizing M&A activity Other stock claims ERISA 510 claims

6 How Are Insurers Responding?
Insurers’ perspective Pricing Terms Limits

7 How Are Clients Reacting?
Greater awareness/understanding of fiduciary issues Purchasing habits Additional 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 65 Legislation SOX Will market harden or soften?

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