Insurance Marketplace Realities 2027 – Fiduciary Liability

Rate predictions: Fiduciary Liability

Coverage	Trend	Range
Retirement plan assets <$50 million		Flat to +5%
Retirement plan assets >$50 million		Flat to +5%
Financial institutions		Flat to +5%

Key takeaways

Despite regulatory flux and mixed rulings, strong competition will keep renewals flat into 2027. Capacity remains ample but with substantial class-action retentions. Reduced DOL enforcement balances class action volume to support market stability.

1. Enhanced retentions are shifting from prohibited transaction/excess fee only toward all mass/class actions.
2. Best results if frequent benchmarking, little revenue sharing, no retail shares, clear plan forfeiture language and no tobacco surcharge.
3. Despite Supreme Court's Cornell case lowering the bar for prohibited transactions, judges and legislators have taken steps to reign in class actions.

Developments and market drivers to watch

Excessive fee/imprudence class actions

Only one true excessive fee class action was filed in Q1 2026, but there were 32 investment prudence cases (a category often miscategorized as excessive fees). After mixed decisions from appellate courts as to whether they require pleading “meaningful benchmarks” for comparison, the Supreme Court will consider the issue in the Intel case, with the DOL submitting briefs supporting defendants. Settlement medians in 2025 were down to $1.6 million.

Forfeiture class actions

Although nearly 100 class actions have been filed in the past three years challenging the use of unvested company match funds to defray future plan contributions instead of reducing participant expenses, only six cases were filed in Q1 2026. Most cases have been dismissed, and the DOL has now submitted multiple briefs in support of the defendants. Still, settlements have been as high as $9.6 million and $42 million.

Other types of class actions

Other class actions persist, especially cases challenging whether tobacco surcharges are administered in a non-discriminatory way (18 in Q1 2026). Other claims arise from pension risk transfers to allegedly risky third parties, and the use of outdated mortality tables to calculate lump sum retirement benefits, which are allegedly not actuarially equivalent. Three class actions alleging excessive fees for prescription drugs have been filed; two were dismissed and appealed, one survived.

Newest type of class action targets voluntary benefit programs

Plaintiffs in four cases so far have sued plan sponsors and benefit advisors. Plaintiffs contend that the voluntary benefit programs are welfare benefit plans that don’t qualify for a regulatory safe harbor, and that there has been self-dealing.

The Supreme Court decision in favor of plaintiff in the Cornell case

In a unanimous decision, the Supreme Court reversed the Second Circuit's dismissal of a prohibited transaction claim against Cornell University. Despite expressing reservations about the bar-lowering effect of their decision, all justices found that plaintiffs didn’t have to plead the absence of a relevant exemption.

Aftermath and backlash after the Cornell decision

Since the decision, courts have followed the Supreme Court’s suggestions to dismiss claims based on lack of standing, have ordered Rule 7 pre-discovery briefing and have entertained fee-shifting against plaintiff lawyers. In addition, Congress is considering a bill which would raise the pleading bar and possibly delay discovery until after a decision on a motion to dismiss.

Two defendants succeed in defeating class certification

Recently, the Fourth and Ninth Circuits have each reversed certification of ERISA class actions, finding irreconcilable conflicts in the proposed classes. These decisions could be very helpful to defendants, since historically fiduciary classes are certified in 95% of cases.

ESG claims on both sides

An airline was accused of being too ESG-focused, resulting in a finding of liability but no damages after a bench trial. Meanwhile, at least one class action has alleged a breach of ERISA fiduciary duty for failing to consider climate change risks, alleging that investment in a carbon-intensive fund exposed the plan to climate related regulatory and physical risks.

Department of Labor/EBSA downsizing, shifting priorities

EBSA proposed a cut of $10 million and 47 employees for 2026 and is expected to be less aggressive in its enforcement efforts.

Executive orders reveal administration priorities

The administration has indicated that it will encourage more private equity and other private market investments in retirement plans and loosen restrictions on crypto, while discouraging ESG investing.

AI and fiduciary liability

Since a successful fiduciary defense requires a well-documented process, understanding, documenting and defending how AI is being used and monitored presents new challenges. Meanwhile, plaintiffs are using AI to mine data and find potential class action claims.

Developments and market drivers to watch

Excessive fee/imprudence class actions

Only one true excessive fee class action was filed in Q1 2026, but there were 32 investment prudence cases (a category often miscategorized as excessive fees). After mixed decisions from appellate courts as to whether they require pleading “meaningful benchmarks” for comparison, the Supreme Court will consider the issue in the Intel case, with the DOL submitting briefs supporting defendants. Settlement medians in 2025 were down to $1.6 million.

Forfeiture class actions

Although nearly 100 class actions have been filed in the past three years challenging the use of unvested company match funds to defray future plan contributions instead of reducing participant expenses, only six cases were filed in Q1 2026. Most cases have been dismissed, and the DOL has now submitted multiple briefs in support of the defendants. Still, settlements have been as high as $9.6 million and $42 million.

Other types of class actions

Other class actions persist, especially cases challenging whether tobacco surcharges are administered in a non-discriminatory way (18 in Q1 2026). Other claims arise from pension risk transfers to allegedly risky third parties, and the use of outdated mortality tables to calculate lump sum retirement benefits, which are allegedly not actuarially equivalent. Three class actions alleging excessive fees for prescription drugs have been filed; two were dismissed and appealed, one survived.

Newest type of class action targets voluntary benefit programs

Plaintiffs in four cases so far have sued plan sponsors and benefit advisors. Plaintiffs contend that the voluntary benefit programs are welfare benefit plans that don’t qualify for a regulatory safe harbor, and that there has been self-dealing.

The Supreme Court decision in favor of plaintiff in the Cornell case

In a unanimous decision, the Supreme Court reversed the Second Circuit's dismissal of a prohibited transaction claim against Cornell University. Despite expressing reservations about the bar-lowering effect of their decision, all justices found that plaintiffs didn’t have to plead the absence of a relevant exemption.

Aftermath and backlash after the Cornell decision

Since the decision, courts have followed the Supreme Court’s suggestions to dismiss claims based on lack of standing, have ordered Rule 7 pre-discovery briefing and have entertained fee-shifting against plaintiff lawyers. In addition, Congress is considering a bill which would raise the pleading bar and possibly delay discovery until after a decision on a motion to dismiss.

Two defendants succeed in defeating class certification

Recently, the Fourth and Ninth Circuits have each reversed certification of ERISA class actions, finding irreconcilable conflicts in the proposed classes. These decisions could be very helpful to defendants, since historically fiduciary classes are certified in 95% of cases.

ESG claims on both sides

American Airlines was accused of being too ESG-focused, resulting in a finding of liability but no damages after a bench trial. Meanwhile, at least one class action has alleged a breach of ERISA fiduciary duty for failing to consider climate change risks, alleging that investment in a carbon-intensive fund exposed the plan to climate related regulatory and physical risks.

Department of Labor/EBSA downsizing, shifting priorities

EBSA proposed a cut of $10 million and 47 employees for 2026 and is expected to be less aggressive in its enforcement efforts.

Executive orders reveal administration priorities

The administration has indicated that it will encourage more private equity and other private market investments in retirement plans and loosen restrictions on crypto, while discouraging ESG investing.

AI and fiduciary liability

Since a successful fiduciary defense requires a well-documented process, understanding, documenting and defending how AI is being used and monitored presents new challenges. Meanwhile, plaintiffs are using AI to mine data and find potential class action claims.