Insurance for Indep. Asset Managers
Investors expect from their asset managers that they act in accordance with the investment mandate. Loyalty, diligence and information obligations are imposed on the asset manager. In Switzerland, compensation for investor losses solely due to market fluctuations are hardly to enforce.
However, if it can be shown that the asset managers acted wrongfully, did not exert the due diligence or did not properly manage conflicts of interest, a demand for damages may be successful in court.
Some asset managers offer services as a 'multi-family office'. Such services include wealth and tax planning, trustee and corporate services, and support with real estate and family governance and services known as 'lifestyle management'. The specific risk profile of such firm needs to be reflected in its liability insurance program.
That said, most asset managers have bought an 'of the shelf' professional indemnity insurance following a recommendation of their industry's association. Experience shows, that a standard product would be a good starting point, but is seldom a sufficient solution as it likely will not reflect the risk profile specific to each firm.
Asset managers that engage in fund management in addition to servicing discretionary accounts, should consider the particular legal liability and regulatory exposure in their risk and insurance strategy.
For asset managers who distribute funds to -qualified or non-qualified- investors need a professional indemnity insurance as part of the FINMA authorisation.
Asset managers, may consider insurance protection against the following:
- Inadequate or incorrect financial advice,
- Insufficient due diligence for assets,
- Errors in processes, execution and decisions in the entity as a whole,
- Protection against unjustified claims,
- Improper delegation of business functions to a third party (outsourcing),
- Failure to comply with terms of the charter or account,
- Improper record keeping,
- Embezzlement by employees,
- Criminal acts by third parties (including extortion and cyber attacks).
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