Obtaining appropriate insurance coverage to protect the interests of your organisation, its investors and your personal position is essential in today’s climate where participants in the asset management industry face an array of legal, operational and regulatory risks. As the aim of insurance is to transfer risk to insurers, a well-structured insurance programme tailored to the particular operations of your business should be a core element in the overall risk management strategy of fund managers and directors. Getting the right coverage in place does require an investment of time and effort, as insurance policy wordings tend to be very technical documents. Unfortunately there are numerous examples where policy wordings have not proved fit for purpose or appropriate procedures are not in place so as to access the insurance cover when required. In this article we examine some of the dangers and pitfalls for insurers in the asset management industry and offer some tips on practical steps for policyholders looking to maximise their insurance coverage.

Types of cover
Participants in the hedge fund industry typically purchase, or have access to, Directors and Officers (D&O) Liability insurance and Professional Indemnity (PI) insurance. The basic characteristics of these policies are shown in Table 1.



Understand and invest in insurance