Did you forget that you must have a bond for your defined benefit plan? Have you been out of compliance for months or MORE!??? Retro-dating ERISA bonds presents unique underwriting concerns for surety underwriters however, we have a solution for you. We have a special program for the backdating of your ERISA fidelity bond need. Compliance is not an option regardless of when a coverage gap occurred!
The principle of “insurance” is risk transfer. A principal pays an insurer a premium in exchange for a “shift” of risk of loss to the insurer. Surety company underwriters seek to minimize the risk of both frequency and severity of loss. Retro-dating presents special concerns, most importantly the assumption of the risk of loss(es) that might have occurred before the surety underwrote and accepted the risk. Further, the premium charged by the insurer contemplates the investment value of the payment in its calculation of sufficiency to cover all the claims from an occurrence (loss claim). Issuing a fidelity bond currently with significant backdating deprives the insurer of that premium investment value. For these reasons retro-dating ERISA bonds is not common. A plan sponsor should never assume that plan compliance will not come to the attention of the Department of Labor. There are civil and criminal sanctions available to the DoL for recalcitrant sponsors. Don’t roll the dice!
ERISA section 412 and 29 C.F.R. §2550.412-1 and 29 C.F.R. Part 2580, require an ERISA fidelity bond equal to no less than ten percent (10%) of the total asset value in the plan if those assets are “qualified”, and one hundred percent (100%) if the plan assets are “non-qualified”. The maximum ERISA fidelity bond amount required under Federal Code is $500,000, however, if the plan is an employee stock ownership plan (ESOP) then the maximum is $1mn.
Visit our ERISA Bond portal at https://www.ERISA-Bonds.com, call (800) 373-2804 or email Underwriting@SuretyOne.com for more information about obtaining this specialty coverage.