How Technology Has Increased Companies' Exposure to Fiduciary Liability

Any company that offers employee benefits faces exposure to risk as a result of their role as fiduciary, which most companies appear to recognize. In fact, almost 3 out of 4 companies claim their intention to purchase fiduciary insurance, despite that only about 1 in 4 companies actually do so.

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What most companies don’t seem to recognize, however, is how much additional exposure they face as a result of the many technological platforms that are involved in the process of managing accounts today.

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While there are many advantages to be gained in terms of efficiency, etc. the very act of selecting a potential platform through which employees can access and monitor their accounts opens the door to potential liability for the company and even the principal fiduciary personally if those platforms make an error, are hacked, or in some other way reflect negligently on the choice.

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Further, even digital communication platforms, while certainly convenient, can lead to misunderstandings and communication failures that can negatively impact employee expectations and outcomes in a way that exposes the company and fiduciary to potential legal liability.

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You can read more about this topic and why fiduciary insurance is worth exploring for both businesses and the insurance brokers who serve them here.