Many firms starting in a regulated environment have a very small staff, who may have limited administrative experience, despite their considerable expertise in other areas
A) All investment businesses
Office Renters combined
Every firm needs as a minimum Public Liability Insurance, and if it has employees, Employers Liability Insurance. Almost certainly it will be renting an office and will have leased equipment, both of which require cover.
Office Renters Combined embraces all these matters. It can be extended at very limited cost to include compensation for the cost of Business Interruption (e.g. Fire) if required.
Directors & Officers Liability
This policy gives comfort in areas where Directors & Officers may be exposed to future actions against them from investors or other parties. Small private companies may not require it. If however, the individuals are directors of a publicly listed fund or company, it is strongly recommended.
Non-domiciled, non-executive directors of offshore funds will always expect it to be in place. In these cases it can be arranged for the fund, or the cover from the UK based adviser extended.
Professional Indemnity Insurance
Although not directly mandatory for FSA regulated businesses other than IFA’s, the vast majority of firms have P.I cover; their clients expect it.
The proprietors of a firm may not believe that their work exposes them to actions against them for error. There may, however, be spurious claims, the defence of which incurs legal fees. In addition, advisers may be joined in actions against other people such as their clients. Professional Indemnity cover can be combined with Directors & Officers Liability.
It is particularly true of start ups that one or two people are critical to success in the early years. Key Man Insurance is designed to provide financial compensation for the death or incapacity of a key individual. It is primarily intended to provide cash for the relevant company to hire a replacement or “fill the gap” in some way. It can also be split so as to compensate both the company and the individual’s family.
B) Broker/dealers and custodians
In and Out Policy
These policies directly address the risks arising from a business which includes great deal of activity in securities, with client and principal positions in a nominee account
C) Corporate Finance
In addition to their direct liability, Corporate Finance Advisers ensure that their clients are appropriately insured in the event of public listings and acquisitions.
Depending on circumstances the following may apply:
- Directors & Officers Liability
- Prospectus Liability Insurance, to give additional comfort where practical verification may be less than optimum .A combination policy is now available for companies to be listed on AiM , which covers both Directors and Officers general Liability and their particular responsibility for the Prospectus
- Insurance to support warranties and indemnities obtained on business acquired, or to cap liability for warranties and indemnities given on disposals
- Insurance to cap the run off-liability on pension funds