ACE EXPRESS Not-For-Profit Health Care Protection Policy

Transcription

1 ACE EXPRESS Not-For-Profit Health Care Protection Policy Fiduciary Liability In consideration of the payment of premium, in reliance on the Application and subject to the Declarations, and terms and conditions of this Policy, the Insurer and the Insureds agree as follows: I. INSURING CLAUSES A. Fiduciary Liability The Insurer shall pay the Loss of the Insureds which the Insureds have become legally obligated to pay by reason of a Claim first made against the Insureds during the Policy Period or, if elected, the Extended Reporting Period, and reported to the Insurer pursuant to the terms of this Coverage Section, for any Wrongful Act taking place prior to the end of the Policy Period. B. Voluntary Compliance Loss and Delinquent Filer Penalties The Insurer shall pay Delinquent Filer Penalties assessed against an Insured, and Voluntary Compliance Loss of the Insureds relating to a Voluntary Compliance Notice first given to the Insurer during the Policy Period or, if elected, the Extended Reporting Period. II. DEFINITIONS A. Adverse Benefits Appeal means an appeal of an adverse benefits determination by an Insured pursuant to the U.S. Department of Labor s ( DOL ) claim procedure regulation at 29 C.F.R. Section (h) or similar claim procedures pursuant to applicable law. B. Administration means: (1) counseling employees, beneficiaries or Plan participants with respect to any Plan; (2) providing interpretations with respect to any Plan; (3) handling records in connection with any Plan; (4) enrolling, terminating, or canceling employees, beneficiaries or Plan participants under any Plan; or (5) determining and calculating benefits, or preparing, distributing or filing required notices or documents with respect to any Plan. C. Claim means: (1) a written demand for monetary damages or non-monetary or injunctive relief (other than an initial application for benefits); including but not limited to a written demand for a mediation, arbitration or other alternative dispute resolution proceeding; (2) a civil, criminal, mediation, arbitration, other alternative dispute resolution, administrative or regulatory proceeding for monetary damages or non-monetary or injunctive relief commenced by: (i) service of a complaint or similar pleading; (ii) with respect to a criminal proceeding, an arrest or a return of an indictment or information; or (iii) the receipt or filing of a notice of charges; (3) a civil proceeding or formal investigation brought by the DOL, the U.S. Pension Benefit Guaranty Corporation ( PBGC ), or any similar federal, state or local governmental body, including but not limited to, the Pensions Ombudsman appointed by the United Kingdom Secretary of State for Social Services, or the United Kingdom Occupational Pensions Regulatory Authority; (4) a fact-finding investigation by the DOL, the PBGC or any similar governmental authority anywhere in the world, including without limitation the Pensions Ombudsman appointed by the United Kingdom Secretary of State for Social Services or the United Kingdom Occupational Pensions Regulatory Authority, commenced by the service upon or other receipt by the Insured of a written notice or subpoena from the investigating authority identifying the Insured as an individual or entity against whom a criminal, civil, administrative or regulatory proceeding may be commenced; PF (04/13) 2013 Page 1 of 10

2 (5) a Plan Inquiry or an Adverse Benefits Appeal, if reported at the option of the Insureds; (6) a Voluntary Compliance Notice, but only with respect to Insuring Clause B; or (7) a written request to toll or waive a statute of limitations, including any appeal therefrom. D. Clean Up Costs means expenses, including but not limited to legal and professional fees, incurred in testing for, monitoring, cleaning up, removing, containing, treating, neutralizing, detoxifying or assessing the effects of Pollutants. E. Consulting Fees means fees charged by a third party actuary, benefits consultant or accountant resulting solely from the correction of non-compliance set forth in a Voluntary Compliance Program. Consulting Fees do not include any fees, costs and expenses associated with: (i) a Plan audit; or (ii) identifying, finding or assessing such non-compliance. F. Continuity Date means the date set forth in Item C.4 of the Declarations for this Coverage Section. G. Corporate Trustee Organization means any entity formed and operating outside the United States of America established by the Sponsor Organization and duly appointed to act as a trustee of a Plan. H. Defense Costs means reasonable and necessary costs, charges, fees and expenses incurred by the Insurer, or by any Insured with the Insurer s consent, in defending Claims and the premium for appeal, attachment or similar bonds arising out of covered judgments, but with no obligation to furnish such bonds. Defense Costs do not include salaries, wages, overhead or benefit expenses associated with executives or employees of any of the Insureds. I. Delinquent Filer Penalties means penalties assessed by the DOL or the Internal Revenue Service ( IRS ) under a Delinquent Filer Voluntary Compliance Program for inadvertent failure to file Form 5500, provided that the failure to file such Form 5500 occurred during the Policy Period or during the policy period of a policy issued by the Insurer of which this Policy is a continuous renewal thereof. J. Employee Benefit Plan means any plan so defined by ERISA. K. ERISA means the Employee Retirement Income Security Act of 1974, as amended, including but not limited to amendments relating to the Consolidated Omnibus Budget Reconciliation Act of 1985 ( COBRA ), the Health Insurance Portability and Accountability Act of 1996 as it relates to sections 102(b) and 104(b)(1) of the Employee Retirement Income Security Act of 1974 as amended, ( HIPAA ) the Newborns and Mothers Health Protection Act of 1996, the Mental Health Parity Act of 1996, the Woman s Health and Cancer Rights Act of 1998, and the Pension Protection Act of 2006, as amended, or any similar foreign, state or local common or statutory law, or any rules and regulations promulgated thereunder. ERISA shall also include the English Pensions Act of 2004, the Pension Benefit Standards Act, 1985 of Canada, and amendments to the Employee Retirement Income Security Act of 1974 pursuant to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of L. Fiduciary means a fiduciary as defined in ERISA. M. Indemnifiable Loss means Loss of an Insured Person resulting from any Claim which the Sponsor Organization is required or permitted by applicable law to indemnify, to the fullest extent so required or permitted, regardless of whether or not such actual indemnification by the Sponsor Organization is made, except and to the extent such indemnification is not made by the Sponsor Organization solely by reason of the Sponsor Organization s financial insolvency. N. Insured Person means any natural person who was, now is or shall become: (1) a trustee (other than a bankruptcy trustee), director, officer or employee of the Sponsor Organization or Plan; PF (04/13) 2013 Page 2 of 10

3 (2) a Fiduciary of any Plan; (3) an individual for whose Wrongful Acts any of the Insureds are legally responsible; (4) a member of a pension committee of a Sponsor Organization or of a Plan, in his or her capacity as a Fiduciary or trustee of a Plan or in the Administration of a Plan; and (5) an individual who formerly served in a capacity set forth in paragraphs (2) through (4) immediately above, who subsequently serves in a consulting or advisory capacity to a Plan, but only if the Sponsor Organization provides indemnification to such individual in the same manner as is provided to other Insured Persons. Insured Persons shall not include any individual in his or her capacity as an employee or executive with any third party, including a service provider, other than a Corporate Trustee Organization. O. Insured Plan means any government-mandated insurance for workers' compensation, unemployment, social security or disability benefits for employees of the Sponsor Organization. P. Insured means: (1) the Sponsor Organization; (2) any Plan; (3) any Insured Person; (4) any Plan Committee of a Sponsor Organization, in its capacity as a Fiduciary or trustee of a Plan, or in its Administration of a Plan; (5) any Corporate Trustee Organization; and (6) if added by endorsement, any other natural person or entity who was, now is, or shall be acting as a plan administrator of any Plan at the written request and consent of the Sponsor Organization. Q. Interrelated Wrongful Acts means all Wrongful Acts which have as a common nexus any fact, circumstance, situation, event, cause, transaction or series of facts, circumstances, situations, causes, events or transactions. R. Loss means damages, judgments, settlements, pre-judgment or post-judgment interest and Defense Costs, including: (1) punitive and exemplary damages and the multiplied portion of any multiple damage award; (2) reasonable and necessary costs, charges, fees and expenses of an independent fiduciary if such fiduciary is retained to review a proposed settlement of a covered Claim; (3) reasonable and necessary costs, charges, fees and expenses of any legal counsel retained by such independent fiduciary to assist with the review; (4) Voluntary Compliance Loss and Delinquent Filer Penalties, but only with respect to Insuring Clause B; (5) the 5% or less, or the 20% or less, civil fines or penalties imposed upon an Insured as a Fiduciary under sections 502(i) or (l), respectively, of ERISA; (6) civil fines or penalties imposed by the Pension Ombudsman or Pensions Regulator appointed by the United Kingdom Secretary of State for Social Services or by the United Kingdom Occupational Pensions Regulatory Authority, pursuant to the English Pension Scheme Act 1993, the English Pensions Act 1995, or rules or regulations thereunder; (7) civil fines or penalties imposed upon an Insured for inadvertent violations of the Pension Protection Act of 2006 ( PPA Penalties ); PF (04/13) 2013 Page 3 of 10

4 (8) the 15% or less tax penalty imposed upon an Insured under Section 4975(a) of the Internal Revenue Code of 1986, with respect to covered judgments ( 4975(a) Penalties ); (9) civil fines or penalties imposed upon an Insured for an inadvertent violation of HIPAA, but only if such violation did not result from willful neglect ( HIPAA Penalties ); (10) civil fines or penalties, other than penalties under the Pension Protection Act of 2006, resulting from the inadvertent failure to file annual reports under Section 502(c) of ERISA ( 502(c) Penalties ); and (11) civil fines or penalties imposed under rules and regulations (including interim final rules and regulations) provided by governmental agencies (including the U.S. Department of Health and Human Services, the U.S. Department of the Treasury, the IRS, and the DOL, the Office of Consumer Information and Insurance Oversight, and the Employee Benefits Security Administration, for inadvertent violations by an Insured of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 ( Health And Patient Care Penalties ), to the extent such damages are insurable under the internal laws of the applicable jurisdiction that most favors coverage for such damages. Loss, does not include, other than otherwise covered Defense Costs attributable thereto: (a) taxes, fines or penalties, except: except fines and penalties set forth in paragraphs (4) through (11) immediately above; (b) matters uninsurable under the laws pursuant to which this Policy is construed; (c) any obligation under a Plan to pay to a participant or beneficiary of the Plan money or property, or to grant a privilege, right, option or perquisite, including any such obligation which would exist under a Plan if the Plan complied with all applicable laws, or that portion of any settlement or judgment which constitutes any such obligation, unless and to the extent that such obligation is based upon a covered Wrongful Act by an Insured Person and such obligation is payable as a personal obligation of such Insured Person; Loss, however, shall include damages, judgments (including pre/post-judgment interest on a covered judgment) and settlements of a Claim against an Insured alleging a violation of any of the responsibilities or duties imposed upon a Fiduciary, as amended, resulting in a loss to a Plan or loss in the actual accounts of participants in a Plan by reason of a decrease in value of the investments held by that Plan, including, but not limited to, the securities of the Sponsor Organization, regardless of whether the amounts sought in such Claim have been characterized by plaintiffs as benefits or held by a court to be benefits ; and (d) Clean Up Costs. S. Managed Care Services means the administration or management of a health care, pharmaceutical, vision or dental Plan utilizing cost control mechanisms, including, but not limited to, utilization review, case management, disease management, pharmacy management, the use of a preferred provider medical, vision or dental network, or a health maintenance organization. T. Pension Benefit Plan means any plan so defined in ERISA. U. Plan means: (1) any Sponsored Plan, and (2) any Insured Plan. However, any Plan created or acquired by the Sponsor Organization during the Policy Period shall be included in this definition only if and to the extent coverage is afforded with respect thereto pursuant to paragraph A of subsection IX of the General Terms and Conditions Section. V. Plan Committee means any employee benefit committee, including, but not limited to, any plan investment or administration committee, that is established by a Sponsor Organization and that is comprised entirely of Insured Persons. PF (04/13) 2013 Page 4 of 10

5 W. Plan Inquiry means any fact-finding investigation in which a Wrongful Act is not alleged in writing and which does not otherwise fall within the definition of subsection II, Definitions, paragraph C(4), commenced by the DOL or the PBGC or any similar governmental authority anywhere in the world, including without limitation the Pensions Ombudsman or Pensions Regulator appointed by the United Kingdom Secretary of State for Social Services or the United Kingdom Occupational Pensions Regulatory Authority. Plan Preliminary Inquiry shall not include any routine or regularly scheduled regulatory or internal supervision, inspection, compliance, review, examination, production or audit, including any request for mandatory information from a regulated entity, conducted in the normal review or compliance process of the Organization, or a law enforcement authority, governmental investigative authority or enforcement organization of a securities or commodities exchange or other self-regulatory entity. X. Pollutants mean any substance exhibiting any hazardous characteristics as defined by, or identified on a list of hazardous substances issued by the United States Environmental Protection Agency or any federal, state, county, municipal or local counterpart thereof or any foreign equivalent. Such substances shall include, without limitation, solids, liquids, gaseous or thermal irritants, contaminants or smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste materials. Pollutants shall also mean any other air emission, odor, waste water, oil or oil products, infectious or medical waste, asbestos or asbestos products, noise, fungus (including mold or mildew and any mycotoxins, spores, scents or byproducts produced or released by fungi, but does not include any fungi intended by the Insured for consumption) and electric or magnetic or electromagnetic field. Y. Sponsor Organization means the Organization. Z. Sponsored Plan means: (1) any Employee Benefit Plan, Pension Benefit Plan, or Welfare Benefit Plan which is operated by the Sponsor Organization solely for the benefit of the employees of the Sponsor Organization; (2) any other plan, fund or program specifically included as a Sponsored Plan by endorsement to this Policy; and (3) any other employee benefit plan or program not subject to Title 1 of ERISA sponsored by the Sponsor Organization solely for the benefit of the employees of the Sponsor Organization, including any deferred compensation plan, supplemental executive retirement plan, top-hat plan, or excess benefit plan for a select group of management or highly compensated directors, officers, governors, management committee members, member of the board of managers, natural person general partners and/or employees of the Sponsor Organization, provided, however, that the Sponsored Plan shall not include any employee stock ownership plan or multi-employer plan, as defined in ERISA, unless such plan is specifically included as a Sponsored Plan by endorsement to this Policy. AA. Voluntary Compliance Loss means any: (i) fines, penalties, sanctions, voluntary correction fees, compliance fees or user fees assessed against or collected from an Insured by the IRS pursuant to a Voluntary Compliance Program for the actual or alleged inadvertent non-compliance by a Plan with any statute, rule or regulation; and (ii) Voluntary Fiduciary Correction Expense. BB. Voluntary Compliance Notice means prior written notice to the Insurer by the Insured of the Insured s intent to enter into a Voluntary Compliance Program. CC. Voluntary Compliance Program means a written agreement to correct an inadvertent Plan defect under a voluntary compliance resolution program or similar voluntary settlement program administered by the IRS, DOL, or any other similar governmental authority, including without limitation the Employee Plans Compliance Resolution System, the Audit Closing Agreement Program, the Voluntary Compliance Resolution Program, the Walk-in Closing Agreement Program, the Administrative Policy Regarding Self- Correction, the Tax Sheltered Annuity Voluntary Correction Program, the Delinquent Filer Voluntary Compliance Program, and the Voluntary Fiduciary Correction Program. PF (04/13) 2013 Page 5 of 10

6 DD. Voluntary Fiduciary Correction Expense means any Defense Costs and Consulting Fees incurred in connection with correction of non-compliance set forth in a Voluntary Compliance Program. EE. Welfare Benefit Plan means any employee welfare benefit plan so defined in ERISA. FF. Wrongful Act means: (1) with respect to a Sponsored Plan: (a) any actual or alleged breach of the responsibilities, obligations or duties imposed upon Fiduciary of the Sponsored Plan by ERISA, or any similar state or local common or statutory law, and any rules and regulations promulgated under such acts; (b) any other matter claimed against the Sponsor Organization or any of the Insured Persons solely because of the service of the Sponsor Organization or any of the Insured Persons as a Fiduciary of any Sponsored Plan; or (c) any actual or alleged act, error or omission in the Administration of any Sponsored Plan, including the alleged failure to properly and timely provide COBRA notices or other required notices, or the alleged failure to make timely determinations of eligibility for benefits. (2) with respect to an Insured Plan, any actual or alleged act, error or omission in the Administration of such Insured Plan; and (3) with respect to an Insured Plan, the alleged or actual: (i) improper or negligent selection of a Managed Care Services provider; (ii) denial or delay of any benefit under a health care, pharmaceutical, vision or dental Plan of an Insured; and (iii) the actual or alleged improper selection of or inadequate monitoring of third-party service providers. III. EXCLUSIONS The Insurer shall not be liable for that portion Loss under this Coverage Section on account of any Claim: A. for actual or alleged bodily injury, sickness, disease, death, false imprisonment, assault, battery, mental anguish, emotional distress, or damage to or destruction of any tangible or intangible property, including loss of use thereof, whether or not such property is physically injured. However, that this exclusion shall not apply to: (i) Defense Costs incurred in the defense of a Claim for a violation of ERISA by an Insured; or (ii) the alleged or actual improper or negligent selection of a Managed Care Services provider or denial or delay of any benefit under a health care, pharmaceutical, vision or dental Plan of an Insured. B. alleging, based upon, arising out of, or attributable to any Wrongful Act, fact, circumstance or situation which has been the subject of any written notice given under any other management liability policy of which this Policy is a renewal or replacement. However, this exclusion shall not apply if the insurer of the other management liability policy denies coverage based upon their conclusion that such notice did not meet the definition of claim or a notice of circumstances under such management liability policy. C. for any failure to comply with any statutory or common law governing workers' compensation, unemployment, social security or disability benefits or any similar law. However, this exclusion shall not apply to any actual or alleged obligation of any Insured pursuant to COBRA or HIPAA. D. alleging, based upon, arising out of, or attributable to any deliberately fraudulent or deliberately criminal act, or any willful violation of any law, by the Insured. However this exclusion shall not apply unless and until there is a final, non-appealable adjudication in an underlying action against such Insured as to such conduct, other than in an action or proceeding initiated by or against the Insurer to determine coverage under the Policy. PF (04/13) 2013 Page 6 of 10

7 E. alleging, based upon, arising out of, or attributable to the gaining of any profit, remuneration or financial advantage to which any Insured Person was not legally entitled. However this exclusion shall not apply unless and until there is a final, non-appealable adjudication in an underlying action against such Insured Person as to such conduct, other than in an action or proceeding initiated by or against the Insurer to determine coverage under the Policy. F. alleging, based upon, arising out of, or attributable to any Wrongful Act actually or allegedly committed or attempted by a Subsidiary or any Insured Person thereof before the date the Subsidiary became an Insured, or after the date the Subsidiary ceased to be an Insured. G. alleging, based upon, arising out of, or attributable to: (1) any prior or pending litigation, arbitration, or administrative or regulatory proceeding, demand letter or governmental investigation filed or pending against an Insured on or before of the Continuity Date; or (2) any fact, circumstance, situation, transaction, cause or event underlying or alleged in such litigation, arbitration, administrative or regulatory proceeding, demand letter or governmental investigation. H. for any employment related Wrongful Acts. However, this exclusion shall not apply to any Claim where such employment-related matters involve actual or alleged violations of ERISA. I. for any violation of the responsibilities, obligations or duties imposed by the Fair Labor Standards Act, as amended, or any rules or regulations promulgated thereunder, or similar provisions of any common or statutory federal, state, local or foreign law that governs wage, hour and payroll policies and practices. For the purpose of determining the applicability of the foregoing exclusions, the Wrongful Acts of, facts pertaining to, and knowledge possessed by one Insured shall not be imputed to any other Insured Person, and only the Wrongful Acts of, facts pertaining to, and knowledge possessed by the Sponsor Organization s chief executive officer, chief financial officer, and general counsel, or equivalent positions, shall be imputed to the Sponsor Organization. IV. LIMIT OF LIABILITY AND RETENTION A. The liability of the Insurer shall apply only to that part of Loss which is excess of the applicable Retention as shown in Item C.3 of the Declarations for this Coverage Section. Such Retention shall be borne uninsured by the Insureds and at their own risk. However, no Retention shall apply to: (i) any Non-Indemnifiable Loss of an Insured Person; (ii) any Delinquent Filer Penalties and Voluntary Compliance Loss; and (iii) any PPA Penalties, 4975(a) Penalties, HIPAA Penalties, 502(c) Penalties and Health And Patient Care Penalties. Further, if the Sponsor Organization and the applicable Plan refuses to indemnify, advance or pay covered Loss of an Insured Person and such covered Loss is within the Retention, then the Insurer shall advance such amounts on behalf of the Insured Person until either: (i) a Sponsor Organization or Plan has agreed to make such payments, or (ii) the Retention has been satisfied. In no event shall any such advancement by the Insurer relieve any Sponsor Organization or Plan of any duty it may have to provide advancement, payment or indemnification to any Insured Person. Any payment or advancement by the Insurer within an applicable Retention shall apply towards the exhaustion of the Limit of Liability. If the Insurer pays under this Coverage Section any indemnification, advancement or payment owed to any Insured Person by any Sponsor Organization or Plan within an applicable Retention, then that Sponsor Organization or Plan shall reimburse the Insurer for such amounts and such amounts shall become immediately due and payable as a direct obligation of the Sponsor Organization or Plan to the Insurer. PF (04/13) 2013 Page 7 of 10

8 B. As shown in Item C.1. of the Declarations for this Coverage Section, the following Limits of Liability of the Insurer shall apply: (1) The amount shown in Item C.1.a. of the Declarations shall be the maximum aggregate Limit of Liability of the Insurer under Insuring Clause A of this Coverage Section. (2) The applicable sub-limit amount shown in Item C.1.b. of the Declarations shall be the maximum aggregate Limit of Liability of the Insurer for the payment of all Delinquent Filer Penalties, Voluntary Compliance Loss, PPA Penalties, 4975(a) Penalties, HIPAA Penalties, 502(c) Penalties and Health And Patient Care Penalties resulting from all Claims. Such amounts shall be part of, and not in addition to, the limit described in paragraph (1) immediately above. C. All Claims arising out of the same Wrongful Act and all Interrelated Wrongful Acts shall be deemed to be a single Claim and shall be deemed to have been made at the earliest of the following times, regardless of whether such date is before or during the Policy Period: (1) the time at which the earliest Claim involving the same Wrongful Act or Interrelated Wrongful Act is first made; or (2) the time at which the Claim involving the same Wrongful Act or Interrelated Wrongful Acts shall be deemed to have been made pursuant to subsection V.B, below. D. Payments of Loss by the Insurer shall reduce the Limit(s) of Liability under this Coverage Section. Defense Costs are part of, and not in addition to, the Limit(s) of Liability and payment of Defense Costs shall reduce the Limit(s) of Liability. If such Limit(s) of Liability are exhausted, the obligations of the Insurer under this Coverage Section are completely fulfilled and extinguished. V. NOTIFICATION A. The Insureds shall, with respect to any Claim other than a Plan Inquiry or Adverse Benefits Appeal, and as a condition precedent to their rights to payment under this Coverage Section, give the Insurer written notice of any Claim as soon as practicable after the Parent Organization s general counsel or risk manager, or equivalent positions, first becomes aware of such Claim, but in no event later than 60 days after the end of the Policy Period, or if elected, the Extended Reporting Period. However, if, during the Policy Period or, if elected, the Extended Reporting Period, the Insureds first become aware of a Plan Inquiry or Adverse Benefits Appeal, and if the Insureds give written notice to the Insurer as soon as practicable after the Sponsor Organization s general counsel or risk manager, or equivalent positions, first learn of the Plan Inquiry or Adverse Benefits Appeal, but in no event later than 60 days after the termination of the Policy Period or, if elected, the Extended Reporting Period, of the entity conducting the Plan Inquiry or the person initiating the Adverse Benefits Appeal, the circumstances by which the Insureds first became aware of the Plan Inquiry or Adverse Benefits Appeal, and particulars as to dates and persons involved, then the Plan Inquiry or Adverse Benefits Appeal shall be treated as a Claim under this Policy, and the Defense Costs incurred by an Insured solely in connection with the defense of a Plan Inquiry or Adverse Benefits Appeal shall be covered, subject to the other terms and conditions of this Policy. Any other Claim which arises out of such Plan Inquiry or Adverse Benefits Appeal shall be deemed to have been first made at the time such written notice was received by the Insurer. However, if the Insureds elect not to report a Plan Inquiry or Adverse Benefits Appeal, then any subsequent Claim which arises out of the Plan Inquiry or Adverse Benefits Appeal shall be subject to the reporting requirements in the paragraph immediately above, and coverage for such subsequent Claim shall not be denied because of the Insureds failure to report the Plan Inquiry or Adverse Benefits Appeal pursuant to this paragraph. B. If, during the Policy Period or, if elected, the Extended Reporting Period, any of the Insureds first becomes aware of a specific Wrongful Act which may reasonably give rise to a future Claim covered under this Coverage Section, and if the Insureds, during the Policy Period or if elected, the Extended Reporting Period, give written notice to Insurer as soon as practicable of: (1) a description of the Wrongful Act allegations anticipated; PF (04/13) 2013 Page 8 of 10

9 (2) the identity of the potential claimants; (3) the circumstances by which the Insureds first became aware of the Wrongful Act; (4) the identity of the Insureds allegedly involved; (5) the consequences which have resulted or may result; and (6) the nature of the potential monetary damages and non-monetary relief, then any Claim made subsequently arising out of such Wrongful Act shall be deemed, for the purposes of this Coverage Section, to have been made at the time such notice was received by the Insurer. No coverage is provided for fees, expenses and other costs incurred prior to the time such Wrongful Act results in a Claim. C. Notice to the Insurer shall be given to the address shown under Item F of the Declarations. VI. SETTLEMENT AND DEFENSE A. It shall be the duty of the Insurer and not the duty of the Insureds to defend any Claim. Such duty shall exist even if any of the allegations are groundless, false or fraudulent. The Insurer s duty to defend any Claim shall cease when the Limits of Liability have been exhausted. B. The Insurer may make any investigation it deems necessary, and shall have the right to settle any Claim; provided, however, no settlement shall be made without the consent of the Parent Organization, such consent not to be unreasonably withheld C. The Insureds agree not to settle or offer to settle any Claim, incur any Defense Costs or otherwise assume any contractual obligation or admit any liability with respect to any Claim without the prior written consent of the Insurer, such consent not to be unreasonably withheld. The Insurer shall not be liable for any settlement, Defense Costs, assumed obligation or admission to which it has not consented. The Insureds shall promptly send to the Insurer all settlement demands or offers received by any Insured from any claimant. D. The Insureds agree to provide the Insurer with all information, assistance and cooperation which the Insurer reasonably requests and agree that, in the event of a Claim, the Insureds will do nothing that shall prejudice the position of the Insurer or its potential or actual rights of recovery. However, the failure of any Insured Person to comply with his or her obligations under this paragraph shall not impair the rights of any other Insured Person under this Coverage Section. VII. OTHER INSURANCE If any Loss covered under this Coverage Section is covered under any other valid and collectible insurance, then this Coverage Section shall cover the Loss, subject to its terms and conditions, only to the extent that the amount of the Loss is in excess of the amount of such other insurance whether such other insurance is stated to be primary, contributory, excess, contingent or otherwise, unless such other insurance is written only as specific excess insurance over the Limit of Liability for this Coverage Section. VIII. WAIVER OF RECOURSE If this Coverage Section is purchased by an Insured other than a Plan, the Insurer shall have no right of recourse against an Insured. Notwithstanding the foregoing, the Insurer shall have a right of recourse against an Insured arising out of a Claim by an Insured against another Insured, unless such Claim is instigated and continued totally independent of, and totally without the solicitation of, assistance of or active participation by, the Insured claimed against. PF (04/13) 2013 Page 9 of 10

10 IX. PAYMENT PRIORITY If the amount of any Loss which is otherwise due and owing by the Insurer exceeds the then-remaining Limit of Liability applicable to the Loss, the Insurer shall pay the Loss, subject to such Limit of Liability, in the following priority: A. first, the Insurer shall pay any covered Non-Indemnifiable Loss of the Insured Persons; and B. second, only if and to the extent the payment under paragraph A immediately above does not exhaust the applicable Limit of Liability, the Insurer shall pay any other applicable Loss in excess of the Retention shown in Item C.3 of the Declarations. X. ALLOCATION If an Insured who is afforded coverage for a Claim incurs both Loss that is covered under this Coverage Section and loss that is not covered under this Coverage Section because the Claim includes both covered allegations and allegations that are not covered, the Insureds and the Insurer shall allocate such amount between covered Loss and loss that is not covered (except Defense Costs) based upon the relative legal and financial exposures and the relative benefits obtained by the parties. The Insurer shall not be liable under this Coverage Section for the portion of such amount allocated to non-covered loss. XI. NO RECOVERY OF AMOUNTS PAID BY INSURER PRIOR TO DETERMINATION OF NO COVERAGE The Insurer shall not seek repayment from an Insured of amounts previously paid to or on behalf of such Insured prior to a determination that: A. an Insured Person of the Sponsor Organization alleged to be a Fiduciary of a Plan is not a Fiduciary of a Plan; B. an alleged breach of fiduciary duty was a settlor act; C. an alleged Plan was not a plan or was not a covered Plan; D. a Sponsor Organization alleged to be the sponsor of a Plan was not the sponsor of the Plan; or E. any other allegation subsequently demonstrated to be incorrect places the Claim outside the grant of coverage of this Coverage Section. PF (04/13) 2013 Page 10 of 10