Navigating Insurance Claims: Five Key Steps for Asset Managers to Secure Coverage

Asset managers purchase insurance to safeguard their business, key individuals within the organisation, and their investments against a range of risks. To make the most of this protection, it is essential for Insureds to understand both how their policy operates and the steps that should be taken when notifying a claim, a potential claim (more commonly referred to as a circumstance), and/or a regulatory situation.

Claims that are otherwise covered can become unnecessarily complex or delayed where policy obligations relating to notification, provision of information and insurer consent are not complied with. Understanding these requirements can materially affect both the resolution and outcome of a claim.

Below are five key steps insureds can take to help ensure a smoother claims process.

1.    Understand Your Policy

Before a policy incepts, it is important to understand the scope of cover and, in particular, the policy conditions relating to notification and insurer consent. Insureds should engage with their Howden account handler when there are material changes to the business, for example, acquisitions, new strategies, new jurisdictions, or new regulated activities, to ensure the insurance remains appropriate.

Being clear on these points at the outset can avoid uncertainty at the point a claim, circumstance or if regulatory issue arise.

2.    Notify Promptly

In many cases, Investment Management insurance policies respond to claims first made, or circumstances first notified, during the policy period, making timely identification and notification critical.

Insureds should have internal procedures in place to identify and escalate matters that may give rise to a claim, a potential claim, or a regulatory event. Early engagement with Howden is strongly encouraged to ensure notifications are made in the correct form and within required timeframes.

Late or incomplete notification can lead to delays in insurer responses and in some cases, coverage difficulties.

3.    Provide Clear and Complete Information

When a notification is made, insurers will typically expect sufficient information to be provided in order to understand the nature of the matter and their potential exposure.

This usually includes:

•    a clear summary of the issue
•    relevant correspondence including any complaints made, or regulatory communications and underlying documentation
•    key dates and parties involved

Providing this information proactively rather than waiting for insurer questions will assist in ensuring a comprehensive and effective notification, significantly reduce delays and help insurers assess coverage more efficiently.

Insurers also require regular updates to monitor their exposure as the claim evolves and to be consulted during the conduct of the defence.

4.    Seek Insurer Consent for Legal Costs

Most policies require insurer consent before appointing solicitors. In addition to agreeing the firm, insurers will usually need to approve both the proposed hourly rates (which often need to be negotiated with insurers before being agreed) and the scope and phases of legal work to be undertaken.

Insureds should check consent requirements before incurring costs and keep insurers informed as matters progress. Failure to obtain the required consent can result in costs being disputed or payments delayed.

5.    Involve Insurers in Settlement Discussions

Policies typically require insurers to be consulted and involved with settlement negotiations. Insurer consent is usually required before any settlement is agreed. Collaborating with insurers ensures alignment and serves to protect the indemnity which an insured is seeking to recover under the policy.

Takeaway

Claims that are otherwise covered can become difficult if policy obligations regarding notification, provision of information and consent are not followed. Understanding your insurance policy and engaging proactively with Howden can make a significant difference to the outcome of a matter notified to your insurers.