Insurance for Family Offices
At the heart of any family office is investment management, However, wealthy families have created their family offices to handle numerous and diverse functions. A typical family office might employ professionals to handle everything from investment management, to bookkeeping services and administration, to public relations consulting for the family.
Similar to members of fiduciary firms and independent asset managers, the family office executive and professional staff face a range of liability exposure: Like all directors, officers, and professionals, those working for family offices can be sued for professional negligence or mismanagement of funds.
Professional services provided by a family office involve fiduciary standards of care. Family office executives must administer their accounts according to the provisions of the office as well as in accordance with the law. Family office executives perform many services commonly associated with trust operations and assume those duties and obligations as well. Many family offices were originally a “single family office”.
In these cases, the family is the owner of the organization and uses its services exclusively for itself. When a family office opens up its services to other families it becomes a “multi-family office”. Latest at this point in time, also 'third party liability' needs to be adequately addressed. Family offices, may therefore consider insurance protection against the following:
- Failure to comply with terms of the charter or account;
- Failure to treat family members impartially;
- Payment of invalid claims against the family;
- Malpractice in estate planning, tax planning, or deviation from investment goal strategy;
- Improper delegation of authority to a third party;
- Improper record keeping;
- Lax or inept oversight of investment managers;
- Insufficient due diligence for assets;
- Protection against unjustified claims;
- Embezzlement by employees;
- Criminal acts by third parties (including kidnapping and extortion attacks).
Insurance solutions are available for both single and multi-family offices. Insureds choose the professional services to be covered under the policy, so they only pay for the coverage they need. A 'Family Office'-professional indemnity insurance can be combined with D&O liability insurance to create one comprehensive management and professional liability solution. Outside director liability insurance is also available for family members or family office representatives sitting on outside boards.
Without proper insurance in place, directors, officers and professionals could find the firm's equity and even their personal assets at stake should claims arise. And, given the risk of liability, they may be reluctant to accepting certain positions.
WALKER RISK SOLUTION has developed a methodology, which matches the client specific risk profile with insurance solutions available in Switzerland or in the London insurance market. This approach enables bespoke solutions that protect the client from financial loss arising from a variety of financial, operational, legal or regulatory risks.
Our clients are experts at what their industry is. We are experts at how to design insurance programs and manage the insurance markets to bring about the best results.
WALKER RISK SOLUTION LTD
Bespoke Insurance Solutions for the Financial Sector
Expertise - Client Focus - Independence