Berkshire Hathaway Specialty Insurance, the newest unit of the Berkshire Hathaway conglomerate, said Monday it plans to begin selling policies covering sponsors and administrators of employee benefit plans.
The expansion into liability insurance for companies that sponsor workplace benefit plans covered by the Employee Retirement Income Security Act of 1974 and the people who make decisions about them is the third new business line for Berkshire Hathaway Specialty in the past three months. In June, the company entered the market for policies covering large construction projects; in May, it was travel insurance.
“Berkshire’s entry into the fiduciary liability market is a logical extension of its specialty insurance business and Berkshire’s overall insurance operations,” said David Kass, a business professor at the University of Maryland, who is also a Berkshire Hathaway shareholder and brings student groups to Omaha to meet Warren Buffett, chairman and CEO.
Berkshire officials “have the ability to underwrite more intelligently than most, with bigger risks, and costs below average,” Kass said.
Boston-based Berkshire Hathaway Specialty Insurance was formed about a year ago, making it the first large-scale foray into business insurance by a subsidiary of Omaha-based Berkshire Hathaway, which has for decades been earning enormous profits from selling auto and catastrophe coverage. The company also invests premiums collected but not yet paid out to settle claims.
Complex business coverages sold by BHSI include policies for medical practitioners, utilities, banks and officers of publicly traded companies.
Buffett approved the new effort when talent came up for grabs, with the departure of several top executives from New York-based American International Group, the world’s largest insurer.
The latest effort is concentrating on companies and people affected by the federal pension and benefit plan laws. Fiduciary liability insurance pays for legal liabilities when people or companies are sued over their administrative, trustee or other leadership capacities related to ERISA-covered plans such as pensions and 401(k) offerings.
The insurance group said in a statement it had named Rhonda Prussack, a 24-year industry veteran, to the newly created position of vice president of fiduciary liability.
Prussack was most recently the executive vice president of fiduciary liability at AIG. Earlier, she was a senior retirement plan consultant at Dean Witter Reynolds and before that worked at the New York City Employee Retirement System.
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