Insurance
Home›Insurance›Liability Insurance›Voluntary benefits commissions face ERISA litigation r…
Voluntary benefits commissions face ERISA litigation risk
Public filings are being used by plaintiffs to compare broker compensation, including commission figures tied to Mercer over 2020 to 2024.
Broker commissions embedded in voluntary employee benefits are increasingly becoming targets in proposed class actions, as plaintiffs argue employers and advisers did not adequately monitor what workers were paying, according to Insurance Business.
Quarles & Brady attorneys Sarah Sise and Lauren Schuster said the lawsuits are borrowing legal theories used in retirement-plan fee cases, including alleged breaches of prudence and loyalty, failure to monitor, and prohibited transactions.
One case, Pimm v. United Airlines, alleges Mercer received more than $14 million in commissions between 2020 and 2024, averaging about 36% of premiums, while the products historical loss ratio was reportedly significantly below 50%.
Fellows v. Allied Universal alleges Mercer and Lockton received about $23 million over 2020 to 2024, averaging 39.8%, while public filings are cited as showing commissions around 10% or lower for some comparable large plans.