Trustee Risks/ Civil Duties/ Professional Trustees Basic - - PDF document

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Presented by Loukia Stylianou 28/09/2017 & 29/09/2017

• Trustee Risks/ Civil Duties/ Professional

Trustees Basic Principles of Insurance Paradox of Trustee Insurance Insurance Approach & Challenges Securing Proper Cover Best Practice

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Trustees’ Liability: Fiduciary duty Professional duty

▪ Higher standard of care

Implications: Criminal liability; i.e. imprisonment, fines &

penalties

Civil liability Civil Duties To Beneficiary; claims against trustees or the trust

assets depending on the structure of each case

To Settlors;

▪ same if also the beneficiary ▪ otherwise limited financial risk

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Trustees is not a regulated Profession on its

• wn

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

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.

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Fiduciary Liability Insurance vs. Fiduciary

Liability Risk

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 Professional Liability risk & Directors &

Officers Liability Insurance

Focus on regulated professions/ Directorships

• scope for gaps

Need for insurance depends on: how the service is provided business structure Contractual arrangement. Trustee cover as an extension of a

Professional Indemnity Insurance

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But what about Corporate Trustees? Is a

Director of such a corporate trustee covered?

Directors & Officers Liability insurance Misconduct related risks are excluded form

any insurance;

i.e. insider trading, own profit, competing or

abuse are excluded from any insurance

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 but only when

properly described and defined

Directors’ & Officers’ Liability Insurance for the

directors of corporate trustees

Additional cover for administrative/ regulatory fines

• nly;

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Act in the best interest of the Trust Act in utmost good faith with your Insurers Proper structure of insurance cover