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Fiduciary Market Update

Fiduciary Market Update. Jay Desjardins - Aon FSG Richard Haran - Chubb & Son Rhonda Prussack - National Union PLUS - Employment and Fiduciary Issues Symposium - April, 2005. Where Fiduciary Marketplace was Five Years Ago. Low premium High capacity Low frequency of claims/high severity

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Fiduciary Market Update

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  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. 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 What is Driving These Changes?Securities “Tag-Along” Suits”

  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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