Investment Industry Insurance


Increased regulation, together with a greater onus on personal liability, combined with an ever increasing ‘political correctness’ in the area of corporate governance has created a situation where the risks affecting the investment industry and the principal individuals are increasing.

Our understanding of the investment industry would include:

Venture capital companies, private equity companies, investment managers, investment trusts/funds (on- or offshore), unit trusts, hedge funds, hedge fund managers, hedge funds of funds.

The basic internal risk exposures to companies and their Directors and Officers comes principally from the area of alleged professional negligence - Financial Institution Professional Indemnity Insurance - and from the ‘joint and several’ liability attaching to the Directors as a consequence of a wrongful act or a breach of duty. See Financial Institution Directors’ & Officers Liability Insurance.

We are able to provide specialist products to the Investment Industry to protect the liability of their companies and the individuals involved.

Additionally, coverage can be arranged in the following areas:
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Warranty and Indemnity Insurance
Warranty and Indemnity insurance (W&I) backs those obligations, in the form of warranties, given in a Sale and Purchase Agreement (SPA). In the event that one or more of the warranties proves to be incorrect, then the purchaser can lodge a claim against the warrantors (in most cases the vendors) for the loss that they have suffered typically up to seven years post completion.

In the event that a breach of warranty is proven, the warrantor will be liable to make good the loss suffered as a result of the breach.

A typical policy covers the insured for loss arising due to a breach of the insured warranties and/or a call on the tax indemnity. It is possible for the vendors or the purchasers to be the insured party.

The policy wording is generally based upon the lead underwriter's standard form which is then tailored to meet the coverage requirements of each transaction and create a bespoke solution.

There are some standard exclusions to the coverage which are non-negotiable, generally relating to the conduct of the insured. This type of insurance is not designed to cover forward looking warranties or performance guarantees
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Prospectus Liability Insurance
Listing particulars and the prospectus need to include detailed information on various aspects of the issuing company's business.

Whilst there are strict regulations in place to guide the directors regarding the information to be provided, the personal responsibility for the contents and accuracy of the information falls largely with the directors who will be jointly and severally liable for mis-statements or omissions.

Prospectus Liability insurance (also known as Initial Public Offering Insurance(IPO)) covers potential liabilities arising out of:
  • The issue documents, e.g. the prospectus/listing particulars.
  • Prior activities in connection with the offering, e.g. negotiations, discussions and decisions.
  • Non-US listings and certain US listings.
  • Cover may also include legal and other defence costs incurred in connection with a claim against the insured and may even extend to public relations and crisis management expenses.
Who should consider this insurance?
Both the issuing organisation and the directors and officers may be covered by the policy. In addition it can offer protection to claims lodged against other employees of the company. It can also be extended to include the professional advisors to the transaction (if required).
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Intellectual Property Rights Insurance (IPRI)
This insurance indemnifies you for legal expenses arising from the following:
  • The pursuit of any claim or legal proceedings in the civil courts arising from either the infringement or alleged infringement of your IPR.
  • The defence of any claim or legal proceedings made in civil courts arising from the infringement of IPR.
  • The pursuit of any claim or legal proceedings in the civil courts arising from any breach of a written confidentiality agreement or licence agreement.
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Edward Howard Insurance Services Ltd. is authorised and regulated by the Financial Services Authority. FSA Reference Number 306921 Registered in England. Company No. 3520697