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Hedge Fund Industry Increasing Focus On Specialty Insurance Coverage
Maloy Sees Continued Growth of Directors and Officers and Professional Liability in 2010 |
March 2, 2010 – (NEW YORK, NY & PRINCETON, NJ) /PRNewswire/ -- Custom insurance and risk management programs designed specifically for the hedge fund industry gained momentum in 2009 and are projected to show a steady increase in 2010. The projections come from Maloy Risk Services, a leading provider of insurance brokerage and risk management services based in Princeton, New Jersey.
“Several factors are driving alternative asset managers to secure coverage ranging from: the changing regulatory environment, institutional investor demand and independent directors seeking protection beyond the fund indemnification”, said Richard A. Maloy, Jr., CEO of Maloy Risk Services. “We saw a significant increase in Directors and Officers/Professional Liability coverage requests from our client base in 2009. The managers and directors are looking to protect fund assets against regulatory investigations, investor litigation, and operational mismanagement liabilities. What was once an optional coverage purchase has become a requirement driven by investor due diligence.”
In an effort to meet the demand, Maloy has been working with specialty insurers to create cutting edge policy language and a series of educational webcasts will be held during the year for several associations, including the Regulatory Compliance Association and the Managed Funds Association. Maloy represents all of the major insurers currently handling coverage for this market. Access to the specialty insurers is critical and enables Maloy to handle any size alternative asset manager, from the start up to multi-billion dollar funds with international operations.
Key provisions for policy negotiation include (but are not limited to):
- Director and Officers Carvebacks to the Insured Vs Insured exclusion
- Final adjudication language to the fraud and personal profit exclusions
- Severability of the application with a limit of 12 months on the information submitted on the application
- Full regulatory investigations coverage
- Broaden the definition of Professional Services
- Automatic coverage for newly created funds
- Broaden the Definition of Claim
- Amending the insured organization definition and the insured person definition, watch for managed accounts which are often not picked up by definition.
"As a manager with hedge fund and private equity strategies, we have challenging insurance issues. Maloy’s guidance and advice over the past six years have been invaluable to us,” said Rich Puma, COO, Ospraie Management, LLC. “The coverage structures are always changing, and having a broker who understands the trends and is able to capably work with our attorneys gives us confidence in our coverage."
About Maloy Risk Services:
Maloy Risk Services, Inc. has been a leading provider of property and casualty insurance brokerage and risk management services since 1872. Led by its fifth-generation CEO, Richard Maloy, Jr., the company has succeeded by leveraging its deep industry experience, technology and industry specialization servicing Hedge Funds, Venture Capital, Technology and Life Science companies. Maloy’s Hedge Fund client list of more than 80 funds includes some of the largest funds in the world. They are the sponsored broker of the HFA, a major sponsor of the Regulatory Compliance Association and are regular speakers on panels and webcast. Maloy Risk Services has offices in both New York City and Princeton, NJ. For additional information please visit www.maloyrs.com.
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GrowthAgents
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