It’s that time of the week again! As some of you know, every Friday I cover five of the many things that have crossed my desk over the week, but which I have not had time to write about yet, in one fell swoop. Here are this week’s five winners.
- This is a terrific article about pricing, underwriting, coverage limits and insureds’ knowledge of their coverages with regard to cyber insurance at this point in time. What’s most interesting to me about it is that it reflects that insurers believe they now have their underwriting approach squared away and the positive impact that is having for insureds with regard to cyber coverage. It illustrates how in the best of markets, insureds and insurers both benefit from an informed, well-adjusted market for particular coverages. Over time, neither insureds nor insurers benefit from a poorly priced market caused by the novelty of a developing risk or lack of accurate information. Equilibrium serves everyone better over time, as the article reflects.
- About 10 or 15 years ago, I got involved in a blog battle with some scholars of retirement over the financing cliff faced by social security and also by some pension plans (particularly public), when I suggested that one central aspect of any fix would be to raise the retirement age. My adversaries suggested that this was a fine idea for someone like me, a knowledge worker who went to the gym at lunchtime every other day, but that for many people with physical jobs, that wasn’t really a useful suggestion. I had to admit at the time that they had a point. I thought of that long ago debate when I came across this detailed article explaining how the data actually supports the position that later retirement ages are actually better for health and longevity. If you accept the data and the analysis, then it is possible that the proverbial knowledge worker – along with the society that has to bear the costs of health declines in an aging population – is better off retiring as late as possible, and not linking that to the invented construct of 65 as the proverbial age of retirement. And if you accept that, then maybe many of the rules around ERISA – such as required minimum distributions – are ill thought out, as vestiges of a belief that retirement, and the burning off of retirement assets, should occur on some sort of standardized timeline.
- I insist so far on remaining neutral on the question of whether the push to put private equity and other alternative investments into 401(k) plans is appropriate or, instead, just the latest version of the old saw that Wall Street sees retail customers as the dumb money. I remain neutral because I still don’t believe I have seen legitimate, confirming data that adding these asset classes into 401(k) plans will benefit participants and increase their returns without excessive increase in volatility or other risks, and until that point is established, any such move by plan sponsors and fiduciaries puts them, more than anyone else other than the participants themselves, at financial risk. At the same time, to be fair, no one has yet convinced me, on data and not just supposition and argument, that there is no possible way such assets could benefit participants. And thus being an evidence-based lawyer (always useful in a litigator) and an evidence-based skeptic in general, I am still waiting to be convinced one way or the other. However, here is a good story on exactly why moving plan participants into these assets may just not work out well for plan participants or others who end up holding those assets when they are moved out of private equity vehicles. And as I have written many times, including in this guide for plan fiduciaries on how not to end up getting sued over this issue, outcomes like these, with potentially serious losses on these types of assets, make it very risky for plan fiduciaries to make the decision to add these classes of assets to plans.
- Is there a bigger bane in the backside (to clean up a barnyard epithet) for ERISA plan sponsors and administrators than uncooperative, unresponsive or outright missing plan participants, particularly when required minimum distributions come due? Well, one thing that will make that less of a pain for those who have to work around them is this excellent guide to “Complying with the Required Minimum Distribution Rules When Participants Are Unresponsive or Uncooperative.” Information and knowledge are always power, and so too with this problem.
- Nuclear verdicts are here to stay. As I have written before, changes in wealth distribution, housing costs and educational costs, which have reinforced an economic caste system that is obvious to anyone sitting in a jury pool, along with the increasingly public flaunting of wealth, has entirely changed the makeup of jury pools and how jurors value losses when they deliberate. When the lost income component of a case involving long term harm to a worker adds up to less than the jurors know the house down the street from them costs, or wouldn’t be enough to cover state college tuition, or whatever other comparator you want to use, it should not be surprising that juries now put a lot more zeroes in their awards for pain and suffering or other amorphous parts of damages awards than they did twenty years ago. Here is a terrific and up to date article on what that means for insurers and corporate defendants.