Erection All Risk Insurance (EAR) issued in connection with construction projects outside the United States, EAR policies are designed to cover the risk of loss arising from the erection and installation of machinery, plant, and steel structures, including physical damage to the contract. works, equipment and machinery, as well as liability for bodily injury to third parties (BI) or property damage (PD) resulting from these operations. Delayed Launch Coverage (DSU) is generally optional. Covered parties include the general contractor, subcontractors and, in some cases, suppliers and equipment manufacturers. Examples of project types for which EAR coverage is commonly purchased include power plants, manufacturing and manufacturing facilities, water treatment plants, and communications centers (especially where signal towers are involved). Some insurers combine EAR and Contractor All Risk (CAR) into one form. Although these terms are sometimes used interchangeably, there are some significant differences between them.
The 10/10 Rule is a matter of analyzing and demonstrating the transfer of risk as a precondition for the use of reinsurance accounting, which was codified in the early 1990s with the adoption of Financial Accounting Standard (FAS) 113 (and its statutory counterpart, SSAP 62). FAS 113 itself was a response to alleged abuses and set the standard for testing whether something should be called an insurance contract. FAS 113 required that the transfer of risk be demonstrated by comparing the present value of the cash flows associated with the contract and, in particular, by exceeding certain thresholds of “significance” of risk. The thresholds, often referred to as the 9a and 9b tests, are: 9a. The reinsurer assumes significant insurance risk under the reinsured parts of the underlying insurance contracts. 9b. It is possible that the reinsurer could suffer a significant loss from the transaction. While neither “significant” nor “reasonably possible” was defined in this context, standard rules of thumb quickly emerged in the implementation of FAS 113. The most commonly cited is the “10/10 Rule”. This rule states that a contract reaches a threshold if there is at least a 10 percent chance that it will suffer a loss of 10 percent or more in present value (expressed as a percentage of the contract premium ceded).
401(k) Fee Claims are claims alleging that those responsible for administering a company’s 401(k) retirement plan allowed the plan’s providers to charge excessive fees. Over many years, even a small difference in the amount of fees charged for administering such plans can have a significant impact on an employee’s balance sheet at the end of that period. Assume that a 401(k) plan investment returns 5 percent annually over a 40-year period. Let’s also assume that an employee contributes $7,500 per year to the plan. If the employee pays 2% per annum during this period, his balance will be $565,509.45. But if the annual pay were reduced to 1.5 percent, a reduction of just ½ percent, the worker’s balance would increase to $634,127.08, a difference of $68,617.63. 401(k) plan fee claims can be especially costly if multiple affected employees file such a class action lawsuit. Fortunately, 401(k) benefit claims are covered by the fiduciary liability policy, since such plans are governed by the Employee Retirement Security Act (ERISA).
A 401(k) plan is the most common type of defined contribution plan in which employees choose to set aside a portion of their compensation. Under a typical 401(k), employees contribute between 1 and 15 percent of their annual pre-tax salary to the plan each year. In addition to this amount, many employers pay an employee contribution, such as 50 to 6 percent of the employee contribution. For example, if an employee contributes 6 percent of their salary to a 401(k) plan, the employer will contribute an additional 3 percent so that the employee saves a total of 9 percent of their annual salary (i.e., 6 percent contribution plus 3 percent employer contribution). There are annual maximum amounts that employees can contribute, as well as distribution limits under the age of 59.5.