27/09/2017 ����������������������������� ��������������� 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 1
27/09/2017 � 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 2
27/09/2017 � 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 � 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. 3
27/09/2017 � 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 4
27/09/2017 � 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 only; 5
27/09/2017 � Act in the best interest of the Trust � Act in utmost good faith with your Insurers � Proper structure of insurance cover 6
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