Hedge Fund Insurance, is shopping right for you?

hedge fund insuranceThis may sound surprising, but the answer to the question of whether hedge funds should shop out their insurance programs is no.

At least not in the traditional sense of giving your policies and loss runs to 2 or 3 brokers and comparing the prices that come back.

Why is my answer no or that I don’t recommend this?

Hedge fund insurance in New York is complicated.  The policy forms such as the combined D&O/E&O, Employment Practice Liability, Crime Insurance, Cyber, and other related policies are complex.  The number of different endorsements to each of these policies is staggering.  Getting those policies negotiated and structured properly is not the job for just any insurance broker.  It takes expertise and experience working with these complex policies.

The problem with shopping out fund insurance New City, NY is that when 2 or 3 brokers compete it’s almost impossible to make a side by side comparison of the resulting proposals.  Buyers attempting to evaluate the “bids” may, unfortunately, default to choosing the lowest price and that is dangerous.

So, what’s the solution?

If you are confident in your broker relationship but are concerned that you’re not getting the most efficient pricing, then I think it makes sense to have a conversation with you broker about it.  Inviting in competition to affect pricing of your hedge fund insurance isn’t that effective as discussed above.  If your existing broker is worth their salt, they will have access to other key insurers in the fund space which he or she can price out your account with.  But more importantly, also perform the required diligence to make sure you’re getting as good or better protection.

On the other hand, if you’re not confident in your broker then maybe it’s time to re-evaluate this relationship.  Again, I don’t suggest sending your account our for bid.  Instead, I think it makes sense to engage two or three qualified brokers in a conversation to determine if they have the expertise necessary to handle your account.  In addition to having the right demeanor and attitude to match with you and your firm’s personality.  Finding a broker that can bring best in class risk management and insurance New York strategies to you is paramount.  It’s more than just the policy.  Your broker should be bringing you risk control services and expertise in areas outside of your policy placement to help you identify, control, and manage risk.

Of course, I believe that The Coyle Group fits that bill with many alt asset funds.  We have deep domain expertise in the hedge fund insurance space and the risk management services to help our clients understand and control risk.

Want to learn more?  I’d love to speak with you further about how we can help you feel more confident about your insurance protection and how we can assist you and your fund on risk management and insurance services.  Just click the button below to be brought to our contact page!   Thanks.

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