Retirement Benefit Fund, Trustee and Third Party Provider Insurance Teri Solomon

The Main Roleplayers The Fund Auditors The Trustees Actuary Asset Manager/ Consultant Administrator Auditors Actuary

The Fund’s Insurance The Fund is covered against loss of fund assets as a result of: Errors and omissions Theft and fraud Third party computer crime Trustees, Committee Members and Principal Officers are covered for their: personal liability cover in the event of, inter alia, breach of their fiduciary duties

The Fund’s Insurance Loss to the Fund as a result of a Wrongful Act by an “Officer” of the Fund. Damages, judgments, settlements, costs and expenses awarded against the Insured Legal costs All costs and expenses incurred require written consent of the Insurer

Some NB Extensions Advancement of Defence Costs (IFA Funds) Carveback for 3rd party provider claims (10% sub-limit) (IFA, AMPLATS) Extended run-off cover for past trustees (36 months). Adjudicator claims deemed notified from date of first ruling Cost of reinstating records Unidentified Officer extension Claims preparation costds Mitigation costs (10% sublimit) (IFA Funds) Regulatory Enquiry Costs (10% sublimit) eg FSB /SARS Data protection extension Impersonation Fraud

Basic Insurance requirements for The Administrator, The Asset Manager and the Actuary and the Auditor The Risk Errors/omissions in the performance of the services – Legal Liability Theft/fraud of own and third party managed funds by employees Legal Defence and other costs in respect of claims made Third Party computer fraud - Theft/Fraud of third party assets under care custody and control Loss of member data following a cyber breach Personal Liability of the Directors and Officers of the Administrator The Insurance Professional Indemnity – legal liability based Commercial Crime incl Social Engineering Legal defence and other costs Third Party Computer Fraud Cyber Liability Insurance Directors and Officers Liability Insurance

Typical Exclusions Fraudulent claims, late notification and material non disclosure Known circumstances Circumstances arising prior to the retroactive date Bodily injury, death, loss of property or destruction therefor Failure of investments to perform Fines and Penalties (unless insurable in law) Other Insurance / More specific insurance

The IFA Fund Trustees V the PFA (2018) – Insurance lessons Adjudicator Ruling Insurance Response No claim made against the fund hence no Loss Mitigation Costs Premium not paid Ask for proof/confirmation Policy cancelled due to misrepresentation and non disclosure and specific matters exclusion relating to the financials Round Robbin the Proposal form and never allow the Administrator to sign off. Beware subjectivities and SME’s Dynamique - R1m PI cover Must vet the insurance arrangements of all 3rd party providers Indemnity clause in the rules Advancement of costs language No Costs order The insurance should have covered this

The Amplats Group Provident Fund V Others 2018 – Adjudicator holds the actuary to the fund liable for a R40m pricing error, exonerates the trustees and the administrator of liability Adjudicator Ruling Insurance Response Actuary liable due to negligent performance of his duties – R1m PI cover Professional Indemnity limit wholly inadequate Trustees did not breach their fiduciary duties Legal defence and other costs should be advanced with no deductible Administrators SLA did not extend to the administrator checking pricing errors Contractual dispute – Administrators PI cover not affected.

MJ Matsheka & others V Mafikeng City Council Pension Fund 2016 Adjudicator Ruling Insurance Effect Deputy PO appointment invalid Claims made against this individual will not be covered Lack of published financials a breach of law Breach of law not covered Board failed to carry out its duties to members No renewal or punitive renewal terms with specific matters exclusion Maladministration and lack of member communication Failure to disclose may void the policy ab initio – will render the fund in breach of the Act

Lessons for Trustees Vett the SLA with ALL third party providers Make the insurance compulsory in the SLA Obtain an independent review of the insurances – quantum and scope Request annual confirmation of cover and premium paid Ensure trustees are happy any indemnity in the rules Ensure trustees understand the Fund’s insurances and the terms and conditions Be prepared to provide evidence of how the Limit was selected Claims should be a board agenda item and renewal should be round robined

THANK YOU