Evolutionary Awards 2025 – Marsh: evolutions in advice

Category: Evolutions in advice

Describe your evolution:

Whilst the Pension Funds Act prescibes that all registered Retirement Funds secure complusory “Fidelity” insurance, the regulator has not provided any meaningful guidelines or tools to assist boards of trustees in asessing an appropriate level of cover.

The insurance product itself has also evolved over time to provide wider cover for new and emerging risks like cyber, necessitating the need for trustees to constantly reassess the chosen limits of indemnity.

Trustees must, in fulfilling their fiduciary responsibilities, ensure the selected level of cover is appropriate relative to the fund’s own unique risk profile. Trustees whom under-insure the fund may well face personal liability claims, regulatory investigations and may suffer irreparable reputational damage.

Following its intial launch in 2015, Marsh, working with Camargue Underwriting Managers, have recently re-launched their updated LI-MIT tool. LI-MIT has been revised to address new regulations and new risks that have evolved over the past 10 years. This online, questionnaire based risk and governace tool provides boards with:

• A deep understanding of the risk profile of the fund,
• A mechanism of identifying specific areas of risk and governance shortcomings or conflicts which require further attention,
• Identifying, based on actuarially risk-weighted data, an appropriate minimum limit of indemnity for the fund’s Fidelity insurance.

LI-MIT is a unique offering in the retirement fund industry, ensuring funds, and ultimately their members, are comprehensively insured and protected in an industry frought with high severity risk.

Describe the impact your evolution has had in response to its identified challenges and targeted outcomes.

As stated above, the FSCA offers no meaningful guidance or tools to assist boards of trustees in assessing or setting an appropriate level of Fidelity insurance for retirement funds, despite the fact that risks for retirement funds continue to evolve and grow.

The challenge LI-MIT seeks to address is to enable trustees to empirically address this challenge, whilst assisting them in fulfilling their fiduciary duties and ultimately ensuring members are adequately and comprehensively protected. Trustees whom make use of the tool not only gain a deeper understanding of the unique risk profile of the fund, but the LI-MIT report, and risk score which is generated from the online questionaire will also highlight any inconsistancies between the trustees responses.

This serves to highlight any risk and governance conflics which may require additional focus. LI-MIT is a true value add offering within an industry facing unprecedented risks which must be appropriately insured.