Susan Gordon, Business Reporter

Craig

A lcoal broker, seeing commercial opportunity in tough, new laws that prescribe stiff 'fine and confine' penalties for pension fund managers and overseers, is building out a new market with a product that covers trustees and officers against personal loss.

With backing from underwriters Lloyd's of London, Billy Craig Insurance Brokers (BCIB), which designed the product a year ago and is about to bring it to market, says it will be offering PenTrust through local insurance partners.

BCIB manager William Craig said his company was targeting clients from 400 of the estimated 800 pension funds, saying only those with asset base of $650 million or more are being considered.

He estimates each fund has about three to six trustees, but it also targeted at directors officers, partners or employees of the employer company or the plan itself. It offers coverage for "any wrongful act, any actual alleged breach of trust, duty, statutory provisions, regulations made, neglect, errors omissions, misleading statement, maladministration, mis-statement and theft or fraud," said Craig.

Those funds that do not meet the $650 million criteria will have the option of negotiating coverage.

The new pension laws passed in 2004 not only prescribe fines, but trustees also stand to lose their personal assets if found guilty of the maladministration of schemes.

"In looking at the act, we realised this imposed a lot more responsibility on the trustees," Craig told Sunday Business.

"For example, when employees' contributions must be paid over in seven days if that is not done, the trustees will be liable for negligence as they would not be ensuring under the act that the employee's pension is handled in a fiduciary manner," he said.

The policy is designed for purchase by the pension fund or sponsor company, and not the individual trustees.

Attracting policy buyers

Craig is banking on the sale-ability of 'peace of mind' to attract policy buyers, saying insurance for trustees translates into greater protection for the fund.

BCIB said it is first to market with a product specifically designed for this group, but Craig said it is likely that insurers are already offering similar coverage inside their current policies.

He declined comment on the investment to roll out PenTrust, as well as revenue projections.

"Anybody can go through their broker in London to get this type of coverage. but we have been working on it for over a year, so we are the first and only one in the Jamaica to put this together," he said.

The policy also protects the trustees in the event of fraud.

Craig said that if the payroll officer, for example, is found to be siphoning funds, PenTrust allows the trustees to claim on this insurance for that sum, limiting the pension fund's exposure.

susan.gordon@gleanerjm.com