Investment Advisors, Hedge and Mutual Funds

Investment Advisors, Hedge & Mutual Funds

Protecting your company, your directors and officers, managing member or general partners

Challenges: Investment Advisors, Hedge and Mutual Funds and Family Offices face a number of threats and challenges in today's marketplace, including, but is not limited to:

. SEC investigations
. Conflicts of interest between the firm and the portfolio companies
. Outside directorship liability
. Suits from limited partners
. Bankruptcy
. Employment practices
. Intellectual property and nonpublic information
. The Financial Stability Act
. Administrative Errors and Omissions
. Cost of Corrections and Trade Errors
. Estate Planning
. Tax Planning
. Bill Payment

Investment Advisors, Hedge and Mutual Funds and Family Offices need management liability insurance coverage to protect themselves from indemnity and financial insolvency, as a backstop for non-indemnifiable claims, and to protect fund performance. Pioneer will work with you to determine the right coverage for your firm and fund(s). Topics such as professional services performed, regulatory exclusion, fraud, loss and claims will be discussed with you to analyze your potential exposures and draft a policy that addresses your firm's and fund's(s') unique risk profile. While each situation and company is different, investment advisors, hedge and mutual funds and family offices should generally consider carrying the following coverages:

Management Liability and Professional Liability Coverage
Management Liability and Professional Liability provides coverage for investment advisers including hedge fund, mutual fund and family office managers and their funds for suits alleging wrongful acts committed in their capacity as directors, officers, managing members or general partners of a firm or fund. Coverage can include outside directorship liability coverage on all scheduled public companies and private companies. The definition of professional services includes, but not limited to, investment advice and the management and operation of the funds, asset allocation; the selection and oversight of outside service providers; marketing and solicitation of private funds; the formation, capitalization, and disposition of portfolio companies, including acts in the capacity of controlling shareholder and the review, analysis and selection of other funds. Coverage can also be expanded to include coverage for Employment Practices Liability, Private Company Directors & Officers Liability Insurance, and Outside Directorship Liability coverage. Family Office Professional Liability insurance coverage can be extended to include, but not limited to, estate planning, tax services, bill payment and similar activities and single-or multi-family offices.

Side A Directors and Officers Coverage
Side A Directors and Officers (D&O) Liability Insurance that provides only 'direct' coverage of the directors, officers, managing members, or general partners, but does not cover the firm, fund or corporation's legal obligation to indemnify the directors, officers, managing members, or general partners (known as Side B or corporate reimbursement coverage). Side A-only forms are written either on an excess or umbrella basis over a primary Management Liability/Professional Liability policy. When written on an excess basis, they provide additional limits if a claim exhausts the coverage available under the primary form. When written on an umbrella basis, Side A-only policies afford broader coverage than the underlying, primary Management Liability/Professional Liability Coverage policy, as well as additional limits.

Outside Directorship Liability
Outside Directorship Liability is the coverage provided by Management Liability/Professional Liability Insurance for service on boards of directors outside the insured firm. Typically, such coverage only extends to service on the boards of nonprofit, rather than for-profit companies. Outside directorship liability coverage is found within the majority of corporate Management Liability/Professional Liability Policies and is written on either a double excess or a triple excess basis.

Employment Practices Liability Insurance
Employment Practices Liability Insurance coverage for employment practice allegations made against the insured organization and insured persons. The policy includes, but is not limited to, coverage for claims of discrimination, sexual harassment, hostile work environment, wrongful termination and other employment-related issues.

Fiduciary Liability
Fiduciary Liability covers trustees, employers, fiduciaries, professional administrators, and the plan itself with respect to Errors and Omissions (E&O) in the administration of employee benefit programs as imposed by the Employee Retirement Income Security Act.

Blanket Bond
The Blanket Bond, also called the Financial Institution Bond, protects Investment Advisors, Hedge and Mutual Funds and Family Offices against loss from dishonest acts of employees, burglary, robbery or theft (both on the premises and in transit), forgery, counterfeiting, misplacement, check kiting, electronic funds transfer as well as a number of perils particular to the financial sector. Some carriers extend coverage to include kidnap/ransom coverage. If Kidnap/Ransom extortion coverage is not part of the bond, it can be purchased separately.

Cyber Liability
Cyber Liability covers first and third party risks associated with e-business, the Internet, networks and informational assets. Coverage can include, but is not limited to, privacy issues, the infringement of intellectual property, cyber ransom, business interruption, virus transmission and breach response.

Representations and Warranties
Representations and Warranties protects when complex transactions, such as mergers and acquisitions, carry risks for both parties involved in the transaction. Pioneer can help structure insurance coverage to mitigate and fund uncertainties created by purchase and sale transactions.

Claims Advocacy
Claims Advocacy can sometimes be a complex process which is why our dedicated claims management personnel work closely with our clients to successfully navigate the claims handling process with them. Claims advocacy includes: consulting with clients on best practices for early identification and reporting of covered matters, to claims submission on our clients behalf and analysis of carriers coverage positions through structuring of settlement agreements and oversight of expense reimbursement and claims payments. Our goal is to identify responsive coverage provisions and be instructive as to potential hurdles and consequences in the course of a claim's adjudication.

To discuss your firm or fund's specific needs, please contact us here.

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