Malcolm Padayachee, Business Head of Professional Indemnity and Liability at SHA Risk Specialists
SHA responds to market demand with a new product developed for Business Rescue Practitioners amid rising risks
SHA Specialist Underwriters has announced the launch of its new bespoke Professional Indemnity (PI) product aimed specifically at business rescue practitioners. In an economic environment where many corporates are still struggling to recover, and over 42.7% of small businesses have been forced to close their doors since the start of the COVID-19 pandemic, highly skilled business rescue practitioners have never been more in demand. In addition, a side-by-side comparison of the number of businesses that have gone into active business rescue shows a 37% increase between 2019 and 2020.
However, Malcolm Padayachee, Business Head of Professional Indemnity and Liability at SHA Risk Specialists, says that professionals in this space have significant risk exposures that could impede their ability to perform their duties effectively. “We have seen a marked increase in demand for a product that would cover the liabilities attached to business rescue practitioners. SHA responded to this market need and developed a niche product to protect these practitioners against the risks presented by the current business landscape.
“We tailored the product to protect business rescue practitioners in terms of their specific duties and obligations contained in Chapter 6 of the Companies Act. It covers the professional’s legal defense costs against allegations of gross negligence, standard negligence and – as an optional extension – theft of funds.”
Padayachee explains that this new cover product is intended to be purchased either by a company – of business rescue practitioners on a blank cover basis, or a single business rescue practitioner. “The policy specifically applies to the professional who has been appointed as the business rescue practitioner for that particular case. To be clear, a person may be appointed as a business rescue practitioner of a company only if that person is a member in good standing of a legal, accounting or business management profession.”
He notes that one of the biggest challenges around insuring a professional under a professional indemnity policy is the fact that each business rescue case is unique. “Whether a business enters voluntary or compulsory business rescue, the financial state of the company, and the creditors and stakeholders involved, are all variables that dictate many of the risks involved for each case. As such, we have bespoke policy wording in each case.”
The product was designed to be flexible and is offered in four different ways – all policies will be annually renewable. “The policy can be taken out in four different ways – as a sole proprietor business rescue practitioner for a single appointment, a sole proprietor business rescue practitioner for many appointments on a blanket basis, as a business rescue company for a single appointment, or as a company employing many business rescue practitioners holding many appointments on a blanket basis.”
Padayachee adds that the business rescue process is complex, and there are many components to get right for it to work. “Ensuring that the professionals at the forefront of the process are adequately protected, is one of the most important ways to guarantee success,” he concludes.