Detroit Business and Insurance Law Blog

We’ve been looking in recent posts at the fiduciary duty retirement plan administrators owe employees with respect to monitoring appointed investment advisors for 401(k) plans. As we noted last time, the duty does not entail constant, direct monitoring of investment advisers, but enough attention to detail that the employer is able to take corrective action as necessary.

According to the Michigan Chamber of Commerce, employers should establish monitoring policy which allows for corrective action when certain events take place. Such events include: significant changes in the investment market; amendments in the plan or investment policy; changes in law; receipt of significant news concerning an investment adviser or an investment; and when there are concerns about an investment advisor’s work or the type or location of the investment. 

For employers, one important aspect of doing business is ensuring the business is in compliance with the requirements of the Employee Retirement Income Security Act of 1974 (ERISA), the federal law which lays out the rules and regulations for setting up and administering employee health and retirement plans. Of particular importance under ERISA are the fiduciary duties associated with management of retirement plan investments.

Fiduciaries associated with employee retirement accounts are required to administer the plan for the sole benefit of plan participants and beneficiaries. Part of what this entails is prudent management of retirement investments, including diversification to minimize risk of significant losses. Fiduciaries who fail to act prudently in managing investments can be held personally liable for plan losses.  

No-fault insurance is a requirement here in Michigan, and every driver is required to carry minimum coverage amounts. Drivers may, of course, purchase higher coverage amounts and additional options for coverage. An essential aspect of any no-fault policy, though, is personal injury protection, which obligates insurance companies to pay all of their insured’s medical costs.

Under Michigan law, automobile insurers have the obligation to pay valid claims and medical bills within 30 days or they face penalty interest payments. Accidents victims who aren’t covered properly have the right to sue their insurance company for no-fault benefits under the terms of their policy. Often, though, it is medical providers who file these lawsuits. 

For businesses, managing risks is critical to ensuring the financial success of the company. There are a variety of ways business can address risks, and insurance coverage is an important one. While ordinary commercial plays an important role, business can often benefit from alternative insurance options, such as captive insurance.

Captive insurance is coverage provided by an insurance company completely owned and controlled by the insured business. The purpose of a captive insurance company is to address risks that aren’t adequately covered with ordinary insurance coverage, but an added benefit is that businesses that form captive insurance companies are able to keep the rights and investment income on capital used to fund insurance.