Trustee Liability

Trustees face personal liability for their fiduciary duties and responsibilities in respect of the funds they represent, both in terms of statute and common law. Liability is usually joint and several, which is particularly onerous.

The ITOO trustee liability policy provides cover for trustees’ personal liability as well as the fund’s liability for negligence and fraud. The policy is structured as follows:

Insuring Clause:

  • Legal liability – Providing cover for claims against the fund or trustees alleging negligence or a wrongful act (breach of duty)
  • Theft, fraud and dishonesty – Providing cover for the fund arising out of the dishonesty of any of the trustees
  • Third party computer crime – Protecting the fund from outsider fraud via the insured’s computer systems

Claim examples:

  • A trustee misappropriates the funds of a pension fund
  • The trustees fail to carry out a full due diligence and, as a result, a foolish investment decision is taken, resulting in financial loss to the fund
  • The trustees fail to follow due procedure in either locating or allocating funds to all beneficiaries
  • Trustees breach any of their statutory or fiduciary duties, including protecting the interests of the members; acting with due care, skill and diligence; avoiding conflicts of interest; acting impartially toward all members
  • A third party hacker intercepts an instruction to an administrator via our insured’s computer system

Jonathan Healy

011 351 2845

Capacity: R500 million

Required: Proposal form and annual financial statements of the fund