Consequently, some brokers say that this year's percentage increase in fiduciary liability premiums could outpace the rise in premiums on directors and officers coverage, which were up another 20% to 25% as of the second quarter, after climbing 29% last year. Of course, as has been the case in D&O, cost isn't the only issue. Companies are also being asked to take much higher deductibles on fiduciary liability policies. And in many cases, insurers are trying to tie the D&O and fiduciary liability policies together and provide a single cap for coverage. "So you're paying under two policies and only have one available," says Ann Longmore, product leader for executive risks, which includes fiduciary liability, at insurance broker Willis Group Holdings. "It's not good."

Longmore says that it was already harder to get companies the amount of fiduciary liability coverage they wanted at the July 1 renewal and she expects it to be even more difficult at the Jan. 1, 2004 renewal. The lawsuits have discouraged some insurers from writing fiduciary liability coverage, she says, but prices are not yet high enough to have attracted new capital to the area.

Brokers decline to put on number on the potential increase in premiums, which vary based on factors like the amount of company stock in a company's retirement plan, the extent to which the company restricts what employees do with company stock and whether a company has a cash balance pension plan. Longmore says that insurers are wary of any company that has more than 10% of its retirement plan assets in company stock, but she notes that surveys suggest that on average, 28% of the assets in 401(k) plans are in company stock. "So the majority of publicly traded companies are red flags for the underwriters," she says.

Making matters worse, some claim that recent lawsuits are actually broadening the definition of fiduciary responsibility by naming executives without direct responsibility over 401(k) plan investment decisions. Case in point: a suit brought by Enron plan participants that named both former Enron Chairman Ken Lay and ex-CEO Jeff Skilling. A Houston judge recently ruled that Skilling could not be named, but left Lay.

Longmore says that senior executives were always potentially fiduciaries, but haven't always realized that. Nor have senior executives realized that as fiduciaries, they were held to a different set of standards than in their role as executives of a publicly traded company, she says.

The lawsuits related to company stock in retirement plans are adding to pressure on companies to loosen restrictions on the disposal of that stock and place limits on the amount of company stock a plan can hold. And Clark Blackman, chief investment officer of Investec Advisory Group, says there's potential for even bigger changes if executives with responsibilities to both plan participants and shareholders find it impossible to fulfill both sets of responsibilities. "It may end up, when everything's said and done, that companies can't have company stock in their plans anymore."

But Steven Kittrell, a partner in the Washington office of law firm McGuireWoods LLP, predicts that many executives will take steps to get rid of responsibilities to the 401(k) plan. The best way to ensure you're not a fiduciary "is to have the administration of the plan set up very clearly to identify who are fiduciaries," Kittrell says.