Most insurance companies
treat hedge funds like the cowboys of the financial
world because of their investment style and unregulated
status. Professional liability coverage used to be either
non-existent or ridiculously priced for hedge funds because
nobody took the time to understand them. They were pooled
among the riskiest insureds (options, commodities and futures
traders) and nobody bought catastrophic coverage for the
real exposures, and no single insurance product existed exclusively
for hedge funds.
A handful of carriers have specialized
policies for hedge funds. They flexibly bundle all
the critical catastrophic coverages under one policy providing
the hedge fund economies of scale in pricing, a one-stop-shop,
a single policy and tremendous flexibility. Best of all they
have taken the time to research your industry, understand
it, and create a hedge fund insurance product from scratch
to meet your needs.
Unique Policy Features:
- Contemplates all forms of hedge fund
structure, including GP's, LLC's, offshore and on-shore
funds, registered and unregistered funds, investment advisors,
etc. (This was researched with Rope & Gray)
- Wording is specific to hedge funds,
reducing the need for special endorsements.
- Limits can be apportioned among different
coverage types with one overall aggregate. Purchase one
coverage or all. Retentions can vary by coverage. Very flexible.
- Limits up to $5 million
- Low $14,000 - $18,000 minimum premium (for the
1st million; lower thereafter)
- Broad definitions of: wrongful acts,
professional services, claims and losses.
- Worldwide coverage for both acts occurring
and claims made anywhere in the world.
- Coverage for non-U.S. offshore investment
funds investment companies.
- Fidelity/Crime Liability and ERISA
bond available at a discount if purchased in connection
with 40ActPlus policy.
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