Burlington N. & S. F. R. Co. v. White, 2006 WL 1698953 (U.S. June 22, 2006)
Facts of Burlington N. & S. F. R. Co. v. White
Marvin Brown (“Brown”), a manager for Burlington Northern & Santa Fe Railway Company (“Burlington”), hired Sheila White (“White”) in June 1997 to work as a “track laborer.” White was the only woman working in the Maintenance of Way department. White’s primary responsibility was operating a forklift; however, she also performed some of the track laborer tasks.
In September of 1997, White reported to Burlington officials that Bill Joiner (“Joiner”), her immediate supervisor, had repeatedly told her that women should not be working in the Maintenance of Way department and also made insulting and inappropriate remarks to her in front of other colleagues. After Burlington conducted an internal investigation, Joiner was suspended for 10 days and required to attend a sexual-harassment training. Brown then reassigned White to standard track laborer tasks and completely removed her from forklift duty.
White filed a complaint with the Equal Employment Opportunity Commission (“EEOC”) claiming her reassignment amounted to gender-discrimination and retaliation for her complaint against Joiner. In December, White filed another complaint with the EEOC claiming that Brown had placed her under surveillance, constantly monitoring her daily activities.
A few days after filing the December complaint, White and her supervisor, Percy Sharkey (“Sharkey”) had a disagreement. Sharkey claimed to Brown that White had been insubordinate. Brown suspended White without pay causing White to prompt internal grievance procedures, which eventually led Burlington to conclude White had not been insubordinate. White was reinstated, with 37 days backpay for the time she was suspended. She then filed another EEOC charge for retaliation, based on the suspension.
A jury found in White’s favor awarding her $43,500 in damages for her claims of unlawful retaliation. Burlington appealed arguing White did not suffer any harm from these acts of retaliation since she received backpay. The Sixth Circuit heard the matter en banc and affirmed the District Court’s judgment for White. The U.S. Supreme Court granted certiorari to resolve a deviation in the Circuit Courts as to whether Title VII’s anti-retaliation provision forbids only those employer actions and resulting harms that are related to employment in the workplace.
The Ruling
The Supreme Court held that the anti-retaliation provision of Title VII extends beyond workplace related or employment related retaliatory acts and harm. This conclusion was based on several factors. First the court found the language in the anti-retaliation provision of Title VII does not include limiting words such as “hire,” “discharge,” “compensation, terms, conditions, or privileges” as the other provisions in the Act include.
Second the Court found that an employer can retaliate against an employee with actions not directly related to employment and can cause harm outside the workplace: such as in Rochon v. Gonzales, 438 F.3d, at 1213, where the FBI refused to investigate death threats from a federal prisoner made against the agent and his family. Last, the Court agreed with the EEOC manuals stating that a broad interpretation of the anti-retaliation provision is intended to provide exceptionally broad protection to employees who protest discriminatory employment practices.
The Court limited the scope of the Title VII provision, saying it does not protect an individual from all retaliation, but only retaliation that produces injury or harm. They also adopted a rule saying a plaintiff must show that a reasonable employee would have found the challenged action materially adverse.
Ultimately the court affirmed, finding in favor of White and saying that suspension without pay could act as a deterrent to filing a complaint, which is against the primary objective of the Title VII
Analysis
Title VII has always prohibited employers from retaliating against an employee for making a legitimate claim of discrimination. The Burlington decision makes it crystal clear that the protections are even more broad than many employers believed including that employers should not suspend reporters of wrongdoing without pay, even when their claim is being investigated, and that employers should make certain that the pay and job functions of such employees remain the same or nearly the same.
The Burlington decision may place some employers between a “rock and a hard place.” In Burlington the Court had the privilege of Burlington’s internal investigation where it was determined that the harassment did occur, and the actions of the Burlington supervisors gave every appearance of being retaliatory. Unfortunately, not all complaints of retaliation are so “cut and dried.”
A concern is what to do when an investigation is non-conclusive, finding no evidence to prove or disprove the accusation. In the past, a “best practice” was to separate the accuser and the accused to avoid a claim of retaliation.
After Burlington, many employers must now choose to keep accuser and accused together, increasing the likelihood of more issues arising, especially if the accused manages the accuser, or transfer one of the parties to a different, but like position. Simply transferring an employee to a different position no longer appears to be an option.
Checklist
To prevent a Burlington dilemma, employers should keep in mind the following suggestions:
Develop policies and procedures protecting employees who file discrimination complaints from materially adverse actions both inside and outside of the workplace.
Train all supervisors on what can amount to adverse actions against an employee.
Follow all the policies and procedures thoroughly and investigate claims of discrimination fairly without taking any adverse action against the employee making the complaint.
Continue to pay the accuser and the accused during an investigation of a claim.
Make certain that human resources and your legal counsel approve any transfer of an employee who has made a claim of wrongdoing.
If transferring one of the parties becomes necessary, make certain that the transferred employee receives the same pay and benefits and has similar job duties and expectations as required in his or her previous position.
Continually check with all parties of an accusation to make certain that retaliation is not occurring after the matter is resolved.
Wednesday, July 12, 2006
Tuesday, July 11, 2006
Phishers Hooking Employers for $2 Billion Each Year
The Federal Trade Commission (FTC) estimates that thieves posing as legitimate businesses send 75-150 million fake emails daily, a practice is known as “phishing.” These scam artists are looking for financial and personal information that will allow them to steal the identity and money of their victims. Candace Heckman, “Phishing finds victims even among savvy computer users,” seattlepi.nwsource.com (May 1, 2006).
Claiming to represent a legitimate business such as a bank or the IRS, the phisher sends out emails asking the reader to follow a hyperlink to update or verify his or her personal information. If the person receiving the email clicks on the link but never submits any information, the phisher may still be able to capture important data from the victim’s computer.
The FTC claimed that in 2005, consumers lost $929 million to these cons, and businesses suffered losses of $2 billion.
Phishers are not only after the financial information of individuals; the FTC numbers reveal that they are successful in obtaining financial information from businesses as well…$2 billion in losses for 2005 alone.
Any person in charge of an organization’s financial accounts and any person in charge of employee social security numbers are possible targets.
Beware of any email requesting updated financial information. These requests will often appear to come from sites with which you do business, including your financial institutions, and will create the “look and feel” of your institution’s website by incorporating their colors, logos. and disclosure information.
The best method to stop phishing from impacting you is to never respond to emails requesting financial information about you, your organization, or your employees.
When you receive emails asking for such information, do not open the email or any attachment; instead, forward it unopened to a representative of the institution it is reputed to be from and ask if the email is legitimate.
Claiming to represent a legitimate business such as a bank or the IRS, the phisher sends out emails asking the reader to follow a hyperlink to update or verify his or her personal information. If the person receiving the email clicks on the link but never submits any information, the phisher may still be able to capture important data from the victim’s computer.
The FTC claimed that in 2005, consumers lost $929 million to these cons, and businesses suffered losses of $2 billion.
Phishers are not only after the financial information of individuals; the FTC numbers reveal that they are successful in obtaining financial information from businesses as well…$2 billion in losses for 2005 alone.
Any person in charge of an organization’s financial accounts and any person in charge of employee social security numbers are possible targets.
Beware of any email requesting updated financial information. These requests will often appear to come from sites with which you do business, including your financial institutions, and will create the “look and feel” of your institution’s website by incorporating their colors, logos. and disclosure information.
The best method to stop phishing from impacting you is to never respond to emails requesting financial information about you, your organization, or your employees.
When you receive emails asking for such information, do not open the email or any attachment; instead, forward it unopened to a representative of the institution it is reputed to be from and ask if the email is legitimate.
US Hurricanes may wipe out 20-40 Insurers
By Ed Leefeldt - NEW YORK, June 1 (Reuters) - The U.S. hurricane season kicked off Thursday with another gloomy prediction: major storms could cause $100 billion worth of property loss, and wipe out 20 to 40 insurers.
With a booming coastal population and high-priced real estate, "this is not far down the road," said John Williams, an author of the report at A.M. Best Co., a leading rating agency for insurers.
For 3 to 7 percent of insurers exposed to the catastrophe, that could spell disaster, Williams said. Likely to fail are thinly capitalized property casualty carriers that are low-rated at Best, along with some firms not rated at all.
"This will take a bigger bite out of the industry than the 1906 San Francisco earthquake," Williams said.
Insurance costs from last year's major catastrophes, or "megacats" -- Hurricanes Katrina, Rita and Wilma -- have already reached $58 billion, with some claims still in court. In addition, federal aid to rebuild areas such as New Orleans, which was flooded by Katrina, will top $100 billion, Best said.
With population expansion in vulnerable areas and soaring real estate values, catastrophe losses are likely to double every 10 years, according to hurricane modelers. In Florida, which has seen five major hurricanes in the past two years, four insurers have already failed, according to Best.
When insurers are no longer around to answer the phone, the burden falls to the state, which sets up a claims fund and forces solvent insurers to pay the costs. But settlements are slow, particularly after a catastrophe like Katrina has damaged the infrastructure, Williams said.
Insurers are also running from areas where storm damage is likely to be the worst. American International Group Inc. (AIG.N:), the world's largest insurer, is declining to write new property policies in areas of the Gulf Coast, while Allstate Corp. (ALL.N:), the U.S.'s second-largest home insurer, is limiting exposure in areas as far north as New York.
While no one knows where hurricanes will hit this year or in the future, they are almost certain to arrive, fueled by warmer than usual water temperatures and new wind patterns in the Atlantic, forecasters said.
Professor Mark Saunders, head of the British-based Tropical Storm Risk Venture, which plots storms, is expecting two major storms to hit U.S. coastal areas during the hurricane season, which runs for six months through November.
These megacats won't be confined to the Gulf Coast, which has seen the worst of the recent storms. "The specter of a hurricane hitting a major Northeast population center is hardly the stuff of Hollywood fantasy," warned Wendy Baker, president of Lloyd's America, a unit of the insurance syndicate, in a speech on Thursday.
Six of the 10 costliest storms in U.S. history have occurred within the 14 months of the 2004-2005 hurricane season. While 2006 isn't expected to suffer the megacats of 2005, it will be part of a pattern that has seen the most devastating pattern of hurricanes since 1900, said Saunders.
On Wednesday William Gray and his Colorado State University forecasting team repeated their prediction that the 2006 season would produce nine hurricanes, five of which would be major storms with winds over 110 miles her hour.
The National Oceanic and Atmospheric Administration expects eight to 10 hurricanes, with four to six of them major. Saunders' group is the lowest, looking for about eight hurricanes, more than three of them severe. © Reuters 2006. All Rights Reserved.
With a booming coastal population and high-priced real estate, "this is not far down the road," said John Williams, an author of the report at A.M. Best Co., a leading rating agency for insurers.
For 3 to 7 percent of insurers exposed to the catastrophe, that could spell disaster, Williams said. Likely to fail are thinly capitalized property casualty carriers that are low-rated at Best, along with some firms not rated at all.
"This will take a bigger bite out of the industry than the 1906 San Francisco earthquake," Williams said.
Insurance costs from last year's major catastrophes, or "megacats" -- Hurricanes Katrina, Rita and Wilma -- have already reached $58 billion, with some claims still in court. In addition, federal aid to rebuild areas such as New Orleans, which was flooded by Katrina, will top $100 billion, Best said.
With population expansion in vulnerable areas and soaring real estate values, catastrophe losses are likely to double every 10 years, according to hurricane modelers. In Florida, which has seen five major hurricanes in the past two years, four insurers have already failed, according to Best.
When insurers are no longer around to answer the phone, the burden falls to the state, which sets up a claims fund and forces solvent insurers to pay the costs. But settlements are slow, particularly after a catastrophe like Katrina has damaged the infrastructure, Williams said.
Insurers are also running from areas where storm damage is likely to be the worst. American International Group Inc. (AIG.N:), the world's largest insurer, is declining to write new property policies in areas of the Gulf Coast, while Allstate Corp. (ALL.N:), the U.S.'s second-largest home insurer, is limiting exposure in areas as far north as New York.
While no one knows where hurricanes will hit this year or in the future, they are almost certain to arrive, fueled by warmer than usual water temperatures and new wind patterns in the Atlantic, forecasters said.
Professor Mark Saunders, head of the British-based Tropical Storm Risk Venture, which plots storms, is expecting two major storms to hit U.S. coastal areas during the hurricane season, which runs for six months through November.
These megacats won't be confined to the Gulf Coast, which has seen the worst of the recent storms. "The specter of a hurricane hitting a major Northeast population center is hardly the stuff of Hollywood fantasy," warned Wendy Baker, president of Lloyd's America, a unit of the insurance syndicate, in a speech on Thursday.
Six of the 10 costliest storms in U.S. history have occurred within the 14 months of the 2004-2005 hurricane season. While 2006 isn't expected to suffer the megacats of 2005, it will be part of a pattern that has seen the most devastating pattern of hurricanes since 1900, said Saunders.
On Wednesday William Gray and his Colorado State University forecasting team repeated their prediction that the 2006 season would produce nine hurricanes, five of which would be major storms with winds over 110 miles her hour.
The National Oceanic and Atmospheric Administration expects eight to 10 hurricanes, with four to six of them major. Saunders' group is the lowest, looking for about eight hurricanes, more than three of them severe. © Reuters 2006. All Rights Reserved.
Monday, July 10, 2006
Workplace bullies may be next on Insurer's Watchlist
From the playground to the classroom to the office -- bullies can be found in all walks of life, but new anti-harassment legislation in some states could put an end to bullying in the workplace that can be costly for employers.
"We define bullying as strictly repeated health harming mistreatment," Dr. Gary Namie of the Workplace Bullying and Trauma Institute, an advocacy group that supports anti-bullying legislation, told Ortega-Wells of the Insurance Journal. Namie and his organization have supported anti-bullying legislation, or the "Healthy Workplace Bill," since the first bill was introduced in California in 2003. He says bullying in the workplace "undermines legitimate business interests."
While bullying is not currently a protected category under harassment law, Johan Lubbe, a partner at Jackson Lewis LLP law firm, says bullying is likely the next "evolutionary" step in harassment law. He advises businesses to understand what workplace bullying conduct is and to develop preventative strategies that prohibit such conduct in the work environment.
Coverage for bullying claims may already exist under some employment practices liability policies, according to Gregg Draddy, assistant vice president of employment practices liability at The Hartford. Draddy says "there are issues around bullying/harassment that are covered, whether it's under other workplace harassment, infliction of emotional distress, or other areas that are covered under wrongful acts under EPLI policies."
Robert Cap, associate product manager for EPLI and nonprofit D&O, at Shand Morahan, a part of the Markel Corp. Group, argues that the problem in coverage for workplace bullying "is that if the allegation was simply one of workplace bullying, it's hard to do that negligently -- it's really an intentional act."
That's precisely why anti-bullying legislation is needed, says WBTI's Namie.
Source: The Insurance Journal
"We define bullying as strictly repeated health harming mistreatment," Dr. Gary Namie of the Workplace Bullying and Trauma Institute, an advocacy group that supports anti-bullying legislation, told Ortega-Wells of the Insurance Journal. Namie and his organization have supported anti-bullying legislation, or the "Healthy Workplace Bill," since the first bill was introduced in California in 2003. He says bullying in the workplace "undermines legitimate business interests."
While bullying is not currently a protected category under harassment law, Johan Lubbe, a partner at Jackson Lewis LLP law firm, says bullying is likely the next "evolutionary" step in harassment law. He advises businesses to understand what workplace bullying conduct is and to develop preventative strategies that prohibit such conduct in the work environment.
Coverage for bullying claims may already exist under some employment practices liability policies, according to Gregg Draddy, assistant vice president of employment practices liability at The Hartford. Draddy says "there are issues around bullying/harassment that are covered, whether it's under other workplace harassment, infliction of emotional distress, or other areas that are covered under wrongful acts under EPLI policies."
Robert Cap, associate product manager for EPLI and nonprofit D&O, at Shand Morahan, a part of the Markel Corp. Group, argues that the problem in coverage for workplace bullying "is that if the allegation was simply one of workplace bullying, it's hard to do that negligently -- it's really an intentional act."
That's precisely why anti-bullying legislation is needed, says WBTI's Namie.
Source: The Insurance Journal
Friday, July 07, 2006
Bloggers -- Are you at risk?
The most popular new form of expression may soon become the most dangerous. Weblogs, or “blogs,” as they are called, combine the immediacy of a diary with the gloss of an online magazine, creating a potent brew of reportage, opinion, and gossip. With blog-hosting services like Blogspot available for free, nearly anyone can become a journalist. And therein lies the problem.
According to USA Today, blogs and “bloggers” are “rewriting rules of journalism.” With little editorial oversight, and no pretense at objectivity, bloggers have aggressively pursued certain stories that were initially ignored by the mainstream media. As noted by USA Today, bloggers hounded Senate Majority Leader Trent Lott who remarked, at the birthday party of Senator Strom Thurmond, “that the nation might have been better off had Thurmond won his segregationist campaign for president in 1948,” which led Lott to resign his leadership post. Elsewhere, bloggers disclosed that CBS had relied on forged documents in its exposé of President Bush’s National Guard service, leading to the resignation of an award-winning CBS producer and widespread criticism of Dan Rather.
To paraphrase P.T. Barnum, a blog is born every second. There are millions of blogs, devoted to thousands of topics, from cross-country running to gourmet cooking to energy conservation. According to Technocratic, a search engine that indexes blogs, there are over 35 million blogs, 75,000 new blogs are created every day, and blog traffic continues to double every six months. Most blogs require no knowledge of the complicated protocols of web design — just a keyboard and a dream. Once posted, a blog is instantly accessible to anyone on the Internet. Some of the best-known blogs receive a million or more individual page “hits” each month.
But media experts worry about the dangers blogs pose. “The biggest risk is that there isn’t the normal vetting process,” says Kelly Sager, a Los Angeles media lawyer and partner in the law firm Davis, Wright & Tremaine. A reporter who blogs on his own time may nonetheless expose his employer to unanticipated liabilities. For example, an injured plaintiff might claim that the employer is liable for any damaging statements made by the reporter on his blog. The blog might provide evidence of “actual malice” — a critical element of many libel cases — because the reporter is likely to be less guarded about his statements. The disclosure of information on a blog that is not published elsewhere might waive the privilege journalists normally have not to disclose information they learn in the course of their reporting. In short, according to attorney Sager, blogging puts the reporter in the position of “making decisions about content that the publisher might not make.”
And the issue is not limited to publishing companies. Many non-media companies allow or even encourage employees to maintain blogs. Although few cases have been brought against blogs and bloggers to date, Sager says there has been a great deal of discussion and concern among media lawyers. While companies have begun to embrace blogs, recognizing that it provides another forum for news and information — and appeals especially to a younger demographic — they have been slower in recognizing the associated risks. Many employers may be surprised to learn that their employees’ activities — even if done on their own time — could subject them to liability. Others may not realize that claims arising from blogging may not be covered under traditional insurance policies. One thing however is certain: as blogs proliferate, claims against them will inevitably follow.
According to USA Today, blogs and “bloggers” are “rewriting rules of journalism.” With little editorial oversight, and no pretense at objectivity, bloggers have aggressively pursued certain stories that were initially ignored by the mainstream media. As noted by USA Today, bloggers hounded Senate Majority Leader Trent Lott who remarked, at the birthday party of Senator Strom Thurmond, “that the nation might have been better off had Thurmond won his segregationist campaign for president in 1948,” which led Lott to resign his leadership post. Elsewhere, bloggers disclosed that CBS had relied on forged documents in its exposé of President Bush’s National Guard service, leading to the resignation of an award-winning CBS producer and widespread criticism of Dan Rather.
To paraphrase P.T. Barnum, a blog is born every second. There are millions of blogs, devoted to thousands of topics, from cross-country running to gourmet cooking to energy conservation. According to Technocratic, a search engine that indexes blogs, there are over 35 million blogs, 75,000 new blogs are created every day, and blog traffic continues to double every six months. Most blogs require no knowledge of the complicated protocols of web design — just a keyboard and a dream. Once posted, a blog is instantly accessible to anyone on the Internet. Some of the best-known blogs receive a million or more individual page “hits” each month.
But media experts worry about the dangers blogs pose. “The biggest risk is that there isn’t the normal vetting process,” says Kelly Sager, a Los Angeles media lawyer and partner in the law firm Davis, Wright & Tremaine. A reporter who blogs on his own time may nonetheless expose his employer to unanticipated liabilities. For example, an injured plaintiff might claim that the employer is liable for any damaging statements made by the reporter on his blog. The blog might provide evidence of “actual malice” — a critical element of many libel cases — because the reporter is likely to be less guarded about his statements. The disclosure of information on a blog that is not published elsewhere might waive the privilege journalists normally have not to disclose information they learn in the course of their reporting. In short, according to attorney Sager, blogging puts the reporter in the position of “making decisions about content that the publisher might not make.”
And the issue is not limited to publishing companies. Many non-media companies allow or even encourage employees to maintain blogs. Although few cases have been brought against blogs and bloggers to date, Sager says there has been a great deal of discussion and concern among media lawyers. While companies have begun to embrace blogs, recognizing that it provides another forum for news and information — and appeals especially to a younger demographic — they have been slower in recognizing the associated risks. Many employers may be surprised to learn that their employees’ activities — even if done on their own time — could subject them to liability. Others may not realize that claims arising from blogging may not be covered under traditional insurance policies. One thing however is certain: as blogs proliferate, claims against them will inevitably follow.
Wednesday, July 05, 2006
DOL Expands, Simplifies Voluntary Fiduciary Correction Plan
The Department of Labor (DOL) recently finalized and expanded revisions to the Voluntary Fiduciary Correction Program (VFCP). The VFCP is designed to encourage voluntary corrections of fiduciary violations of ERISA by describing how to apply for relief, listing the specific transactions covered, and providing acceptable methods for correcting violations.
To take advantage of the VFCP, an applicant cannot be under investigation by DOL or any federal agency in connection with a plan transaction. If an applicant is not under investigation, the applicant may apply for relief under the VFCP by identifying fiduciary violations and determining whether the violations fall within the transactions covered by the program.
Next, an applicant must follow the program’s procedures for correcting the violations. Generally, a VFCP applicant corrects a violation by: (1) conducting valuations of plan assets; (2) restoring the plan, its participants and its beneficiaries to the condition they would have been in if the breach had not occurred; (3) paying the expenses associated with correcting transactions; and (4) making supplemental distributions when appropriate to former employees, beneficiaries, or alternate payees. Finally, an applicant must file an application with the appropriate Employee Benefits Security Administration (EBSA) regional office.
An applicant that satisfies the criteria and complies with the procedures set forth in the VFCP receives a “no-action” letter from EBSA and is not subject to certain civil and monetary penalties. The VFCP also includes a prohibited transaction exemption (PTE) that provides relief from excise taxes imposed under the Internal Revenue Code for certain transactions covered by the VFCP.
In 2005, DOL proposed revisions to the VFCP that include, among other things, the adoption of a model application form, a reduction in the documentation required from an applicant, and simplification of the calculations needed to determine lost earnings or profits to be restored to a plan. The final 2006 revision adopts many of the 2005 proposed revisions and makes some notable changes. Among the changes are an expansion of the program to provide relief under ERISA Section 502(i) and (1) (which generally apply to welfare plans and nonqualified pension plans), the addition of a new covered transaction for expenses improperly paid by a plan because they were either “settlor” expenses or because a plan’s terms require the sponsor to pay the expenses out of its own funds, and a more narrow definition of when a plan is considered “under investigation.” In addition, DOL expanded the PTE that is part of the VFCP to include two additional covered transactions.
The 2006 revisions to the VFCP are effective May 19, 2006. Notice of the 2006 revisions to the VFCP Update can be found in the April 19, 2006 Federal Register
To take advantage of the VFCP, an applicant cannot be under investigation by DOL or any federal agency in connection with a plan transaction. If an applicant is not under investigation, the applicant may apply for relief under the VFCP by identifying fiduciary violations and determining whether the violations fall within the transactions covered by the program.
Next, an applicant must follow the program’s procedures for correcting the violations. Generally, a VFCP applicant corrects a violation by: (1) conducting valuations of plan assets; (2) restoring the plan, its participants and its beneficiaries to the condition they would have been in if the breach had not occurred; (3) paying the expenses associated with correcting transactions; and (4) making supplemental distributions when appropriate to former employees, beneficiaries, or alternate payees. Finally, an applicant must file an application with the appropriate Employee Benefits Security Administration (EBSA) regional office.
An applicant that satisfies the criteria and complies with the procedures set forth in the VFCP receives a “no-action” letter from EBSA and is not subject to certain civil and monetary penalties. The VFCP also includes a prohibited transaction exemption (PTE) that provides relief from excise taxes imposed under the Internal Revenue Code for certain transactions covered by the VFCP.
In 2005, DOL proposed revisions to the VFCP that include, among other things, the adoption of a model application form, a reduction in the documentation required from an applicant, and simplification of the calculations needed to determine lost earnings or profits to be restored to a plan. The final 2006 revision adopts many of the 2005 proposed revisions and makes some notable changes. Among the changes are an expansion of the program to provide relief under ERISA Section 502(i) and (1) (which generally apply to welfare plans and nonqualified pension plans), the addition of a new covered transaction for expenses improperly paid by a plan because they were either “settlor” expenses or because a plan’s terms require the sponsor to pay the expenses out of its own funds, and a more narrow definition of when a plan is considered “under investigation.” In addition, DOL expanded the PTE that is part of the VFCP to include two additional covered transactions.
The 2006 revisions to the VFCP are effective May 19, 2006. Notice of the 2006 revisions to the VFCP Update can be found in the April 19, 2006 Federal Register
Interesting facts
Interesting facts:
43% of all people age 40 will have a long-term disability event prior to 65.
64% of disabilities occur off the job and are not covered by workers compensation
48% of all mortgage foreclosures are the result of disability.
About 1 in 7 people can expect to be disabled for 5 years or more.
Due to medical advances, things that used to kill you now disable you.
43% of all people age 40 will have a long-term disability event prior to 65.
64% of disabilities occur off the job and are not covered by workers compensation
48% of all mortgage foreclosures are the result of disability.
About 1 in 7 people can expect to be disabled for 5 years or more.
Due to medical advances, things that used to kill you now disable you.
Insurance Company CEOs, Concerned About Capacity and Pricing, Stress Underwriting Discipline
Republished from the Insurance Journal, written by Amy Friedman
Although property casualty insurance capacity still exists in some areas in the U.S.'s east coast, the rate at which it is vanishing, especially in coastal areas, as well as the steep prices being offered for available capacity, have industry executives concerned about pricing discipline.
"Someone's going to have to blink soon," said Ted Kelly, chairman, president, and CEO of Liberty Mutual Group Inc.
Property catastrophe capacity was high on the list of concerns for panelists from the property casualty industry at Standard & Poor's Ratings Services' recent annual insurance conference, "Insurance 2006: Rethinking Risk."
Whether insurers price risk properly is a worry. Even though premiums have doubled in the past three to four years, "pricing in primary markets isn't supporting the cost of reinsurance," Kelly said.
Kelly said that reinsurance capacity might still be 20 percent short of demand in the southeastern U.S., and "[p]roblems getting insurance in the Gulf region haven't been settled yet."
Companies "should look at their enterprise risk management, and what kinds of controls management has on currency and hedging," said Martin Sullivan, president and CEO of American International Group Inc., who would also like to see construction codes improved in the Southeast.
Property casualty industry pricing, looking forward, is a huge question mark, and an additional worry for these CEOs. If 2006's hurricane season is benign, pricing discipline will remain, especially in the catastrophe area, Sullivan said.
Kelly, however, was not so sure. "A pricing bloodbath" could ensue if the hurricane season is moderate, he said. "Watch October renewals--they will be the first sign of a lack of discipline," he warned.
The role capital markets now play in maintaining financial strength also had panelists, as well as the moderator, Standard & Poor's credit analyst Thomas Upton, concerned. Although capital to replace what was lost to the catastrophes of 2005 and 2004 was readily available, it might not be if severe catastrophes hit in 2006.
"I was surprised at the ease of which companies recapitalized after Katrina," said Dinos Iordanou, president and CEO of Arch Capital Group Ltd.
Would companies be better off if they had to replenish capital organically rather than going to the capital markets? Opinions were not uniform. Kelly was emphatic about the industry's need for a free flow of capital, but Sullivan said the industry would be tested if the season were active. Iordanou cited that even if a major hurricane does come, $600 billion-$650 billion of surplus still exists in the global marketplace.
Bottom line, underwriting discipline continues to be important.
"Given the legal environment, what we are writing today will be the issue five to seven years down the road," Sullivan said. Surprisingly, the industry has made an underwriting profit only once in the past 25 years--in 2004. "Clearly, there's room for improvement," Sullivan added.
Although property casualty insurance capacity still exists in some areas in the U.S.'s east coast, the rate at which it is vanishing, especially in coastal areas, as well as the steep prices being offered for available capacity, have industry executives concerned about pricing discipline.
"Someone's going to have to blink soon," said Ted Kelly, chairman, president, and CEO of Liberty Mutual Group Inc.
Property catastrophe capacity was high on the list of concerns for panelists from the property casualty industry at Standard & Poor's Ratings Services' recent annual insurance conference, "Insurance 2006: Rethinking Risk."
Whether insurers price risk properly is a worry. Even though premiums have doubled in the past three to four years, "pricing in primary markets isn't supporting the cost of reinsurance," Kelly said.
Kelly said that reinsurance capacity might still be 20 percent short of demand in the southeastern U.S., and "[p]roblems getting insurance in the Gulf region haven't been settled yet."
Companies "should look at their enterprise risk management, and what kinds of controls management has on currency and hedging," said Martin Sullivan, president and CEO of American International Group Inc., who would also like to see construction codes improved in the Southeast.
Property casualty industry pricing, looking forward, is a huge question mark, and an additional worry for these CEOs. If 2006's hurricane season is benign, pricing discipline will remain, especially in the catastrophe area, Sullivan said.
Kelly, however, was not so sure. "A pricing bloodbath" could ensue if the hurricane season is moderate, he said. "Watch October renewals--they will be the first sign of a lack of discipline," he warned.
The role capital markets now play in maintaining financial strength also had panelists, as well as the moderator, Standard & Poor's credit analyst Thomas Upton, concerned. Although capital to replace what was lost to the catastrophes of 2005 and 2004 was readily available, it might not be if severe catastrophes hit in 2006.
"I was surprised at the ease of which companies recapitalized after Katrina," said Dinos Iordanou, president and CEO of Arch Capital Group Ltd.
Would companies be better off if they had to replenish capital organically rather than going to the capital markets? Opinions were not uniform. Kelly was emphatic about the industry's need for a free flow of capital, but Sullivan said the industry would be tested if the season were active. Iordanou cited that even if a major hurricane does come, $600 billion-$650 billion of surplus still exists in the global marketplace.
Bottom line, underwriting discipline continues to be important.
"Given the legal environment, what we are writing today will be the issue five to seven years down the road," Sullivan said. Surprisingly, the industry has made an underwriting profit only once in the past 25 years--in 2004. "Clearly, there's room for improvement," Sullivan added.
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