Costs and Structures of Hedge Fund Management Liability Insurance Policies

Hedge fund managers’ demand for management liability insurance is rising in response to increasing regulatory scrutiny, market volatility and fiduciary responsibilities of hedge fund managers and directors.  The good news is that insurance prices are falling, thanks to heated competition among insurance carriers.  In a recent interview with the Hedge Fund Law Report, Richard A. Maloy, Jr., Chairman and Chief Executive Officer of Maloy Risk Services, shared his expertise on the hedge fund management liability insurance market, including the types of management liability insurance purchased by hedge fund managers, the costs of such coverage, common practices with respect to negotiating insurance policies and the interaction of insurance with fund indemnification policies.  For more on hedge fund management liability insurance, see “Hedge Fund Insurance Benchmarking Survey Reveals Trends and Views Concerning Insurance Purchasing, Pricing, Coverage Limits, Frequency of Claims and Quality of Claims Service,” Hedge Fund Law Report, Vol. 5, No. 27 (Jul. 12, 2012); and “Hedge Fund D&O Insurance: Purpose, Structure, Pricing, Covered Claims and Allocation of Premiums Among Funds and Management Entities,” Hedge Fund Law Report, Vol. 4, No. 41 (Nov. 17, 2011).

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