Liability insurance should be made mandatory for pension trustees, according to a review of trustees by Brian Holden, chairman of Trustee Risk Management.
Holden's conclusion has found support from Ace European Group.
Emma Watkins, pension trustee liability insurance specialist at Ace, commented: “Our experience in this market very much supports and reflects the comments made by Holden in his report.
“Having seen the impact of claims in the industry and on individual schemes and trustees in particular, we very much support the concept of making the purchase of liability insurance mandatory, with the level of insurance being appropriate to the circumstances in question.”
But Watkins has expressed caution about any subsequent reduction in premiums: “Ace would caution trustees that this will only happen once the market has sufficiently developed, whereupon claims trends will then drive premium figures.
“I would suggest that we need to view the purchase of insurance as one tool within a trustee's risk management toolbox — it should not in any way replace the education and support required for and by trustees. By helping to manage claims, trustees can work in partnership with insurance companies to stabilise premiums.
“Ace would of course welcome the opportunity to work with the Pensions Regulator on this as suggested in the review.”
