Risk Basic Principles of Insurance Paradox of Trustee Insurance - PDF document

17/10/2016 ����������������������������� ��������������� BASIC PRINCIPLES & CHALLENGES Presented by Loukia Stylianou 19/10/2016 & 20/10/2016 � Risk � Basic Principles of Insurance � Paradox of Trustee Insurance � Insurance Approach & Challenges � Available Insurance Solutions � Conclusion 1

17/10/2016 � Trustees’ Liability: � Fiduciary duty � Professional duty � Implications: � Criminal liability � Civil liability � Trustees is not a regulated Profession on its own � A Trustee in Cyprus is usually a Professional � General ignorance of the insurance market to Trustees; consider it part of the services � No Trustee Liability Insurance to fit all needs 2

17/10/2016 � Insurance: A financial risk management tool in which the insured transfers a risk of potential financial loss to the insurance company that mitigates it in exchange for the premium. � Insurable Interest: A person or entity has an insurable interest in something when loss or damage to it would cause that person to suffer a financial loss. � Utmost good faith: Utmost good faith is a common law principle (sometimes called Uberrimae Fidei) which means that every person or entity that enters into a contract of insurance has a legal obligation to act with utmost good faith towards the company offering the insurance. � Fiduciary Liability Insurance vs. Fiduciary Liability Risk � Only Directors & Officers Liability Insurance � Trustee liability Insurance exists only where volume justifies it, i.e. Pension Trustee Liability Insurance in the UK � No “off the shelf product” to fit all needs 3

17/10/2016 � Focus is given on regulated professions and the Directorships allows a scope for gaps � The need of each trustee depends on how the service is provided, business structure and engagements etc. � Act in utmost good faith with Insurers � Transparency on Insurable Interest � Select Insurers that understands your business and have the financial strength to compensate if needed � Professional Indemnity Insurance � Directors’ & Officers’ Liability Insurance 4

17/10/2016 � Act in the best interest of the Trust � Act in utmost good faith with your Insurers 5