Hedge Funds Insurance Rates On The Rise

Mar 15 2012 | 11:12am ET

It's getting expensive to insure your hedge fund—and will get more so, according to a new report.

Professional liability policies are costing 5% to 10% more this year, SKCG Group said. Those policies had been getting cheaper and cheaper over the last few years, with a $200 million hedge fund paying less than $70,000 a year for $5 million of coverage six months ago, down from $125,000 three years ago.

"They are starting the conversation with requests for 10 percent increases, and are eyeing those higher 2009 price levels as a goal for the next few years," SKCG's Richard Canter said.

For now, they're settling for a slight increase over late 2011 prices. The same $5 million policy mentioned above now runs about $75,000.

Hedge fund liability policies cover legal fees in the event of legal or regulatory action. And it is the aggressiveness of the latter that is driving the current jump in rates, according to Canter.

"Insurance carriers know that hedge funds are in regulators’ cross hairs," Canter said.


In Depth

Bob Doll's Ten Market Predictions For 2016

Jan 7 2016 | 9:37pm ET

Well-known market strategist Robert Doll has published his annual list of ten predictions...

Lifestyle

Citadel's Ken Griffin Donates $40M To New York's Museum of Modern Art

Dec 22 2015 | 9:23pm ET

Citadel founder Ken Griffin has donated $40 million to New York’s Museum of Modern...

Guest Contributor

Hedge Fund Marketing - Making the Most of Your Salesperson

Jan 20 2016 | 8:11pm ET

In this contributed article, Bruce Frumerman of Frumerman & Nemeth takes a close...