Professional Indemnity Insurance for Business Rescue Practitioners

Professional Indemnity Insurance for Business Rescue Practitioners

Business rescue practitioners (BRPs) operate in a highly regulated and high-risk environment, where decisions are often made under financial pressure, creditor scrutiny, and strict statutory obligations. Professional indemnity insurance plays an important role in helping BRPs manage the financial risks associated with their professional duties.

Shackleton Risk Management assists CIPC-registered business rescue practitioners in arranging specialist professional indemnity insurance solutions designed specifically for business rescue appointments, subject to insurer underwriting and policy terms.

Specialist Insurance Designed for Business Rescue Appointments

Professional indemnity insurance for business rescue practitioners differs from standard PI cover, as appointments are typically made on a matter-by-matter basis and relate to a specific company under rescue.

To address this, the cover may be structured in the following ways:

Individual Matter Professional Indemnity Cover

An individual matter policy is designed for a specific business rescue appointment. Cover applies in respect of the named company in rescue and the appointed practitioner(s), subject to the policy wording.

In practice, the premium for this policy may be treated as a cost of the business rescue process and paid by the company under rescue, rather than by the practitioner personally, subject to legal and regulatory considerations.

This structure allows the insurance to align directly with the risks arising from a particular rescue mandate.

Blanket Professional Indemnity Cover

Alternatively, a blanket policy may be arranged to cover multiple business rescue matters undertaken by a practitioner or practice, subject to insurer acceptance, declared activities, and policy limits.

Scope of Cover

Cover is typically arranged on a claims-made basis and is designed to respond, subject to the policy wording, to civil liability arising from the performance of professional activities and duties as a business rescue practitioner.

Depending on the policy structure, cover may extend to:

• The appointed business rescue practitioner(s)
• Nominated subcontractors
• Employees assisting under the mandate of the practitioner

Where more than one practitioner is appointed to a matter, cover may include all appointed practitioners, provided this is disclosed and accepted by the insurer.

Extended Reporting Period (ERP)

Business rescue appointments may terminate before a claim arises. To address this, practitioners may have the option to select an Extended Reporting Period (ERP) of 12, 24, or 36 months, allowing claims to be notified after the conclusion of the business rescue, subject to policy terms and conditions.

Additional Cover Sections Available

In addition to Professional Indemnity, business rescue insurance arrangements may include the following sections, each subject to its own terms, conditions, limits, and excesses:

Fidelity Guarantee (FG)

Fidelity Guarantee cover is designed to indemnify the company under business rescue against direct financial loss resulting from theft, fraud, or dishonesty committed by the appointed practitioner, nominated subcontractors, or employees during the tenure of the business rescue appointment, subject to the policy wording.

Misappropriation of Trust Funds (MOTF)

Misappropriation of Trust Funds cover may respond where a claim is brought against the insured arising from the theft or misappropriation of money or property entrusted in the course of carrying out business rescue duties, subject to policy terms.

Impersonation Fraud Cover

Impersonation fraud cover may also be available and is designed to respond to certain losses arising from fraudulent instructions, such as the manipulation of banking details, where the insured has acted in good faith. Availability is subject to insurer underwriting and policy conditions.