Hedge Funds, Equity Firms & Investment Advisors
Venture Capital, Private Equity , Debt funds, hedge funds - the risk landscape changes with each. The variation within fund structures alone; from fee models to differences in PPM’s and investment strategies can greatly shift that risk and the potential for litigation. In few industries is the cost of litigation and the consequence for non-compliance more severe. And the frequency of that litigation and regulatory action is increasing due to new SEC initiatives targeting smaller investment advisors, increased usage of administrative law judges, newly imposed cyber compliance requirements and the DOL imposing new fiduciary standards. Innovations such as the utilization of crowdfunding, analytics, automated trading software and cloud storage pose their own challenges. While these advancements provide great value, convenience and increased efficiency (most of the time), early adoption can come at great risk, as much of this technology and the litigation surrounding it is uncharted water.
While strong compliance and internal controls are a prerequisite, a well structured insurance program is one of the only ways to afford your company and its directors/officers insulation from that risk. Portfolios in this sector revolve heavily around strong executive (D&O), professional (E&O), cyber and management liability protection. As most financial executives are already aware, these products are not standardized or created equal, the strength of an insurance program is greatly dependent on the capabilities of the broker, requiring careful review, audit and negotiation. Negotiating seemingly small verbiage changes can have significant coverage implications. For example, slightly broadening the bankruptcy carve backs and naming “debtor in posession” as a named insured may mean the difference between gaining (or being declined) proceeds to the policy in the event of a bankruptcy. While many of these negotiations can carry little to no premium, they require a proactive effort on behalf of the broker, which further underscores the importance of partnering with a knowledgable broker. As a boutique agency with broad market access and concentration on professional and executive liability, GB&A is particularly well aligned to meet the insurance needs of companies in the financial sector.