IronPro, the professional and management liability unit of Ironshore Canada Ltd., has introduced a professional liability policy for Canadian-based private equity and venture capital firms that, the company said, will protect against portfolio investment risk exposures worldwide.
IronPro's private equity liability insurance policy is a specialty product that provides coverage dedicated to private equity firms facing unforeseen risks arising from funds' indemnity obligations. The company said that the product was developed in response to potential gaps in insurance protection for diverse risk exposures within specialized investment funds managed by Canadian private equity firms. The broad-form, claims-made policy provides coverage for directors and officers, errors and omissions, and employment practices liability insurance lines, and can include provisions for general liability risks, according to IronPro. Policy limits are available for up to $15 million.
“IronPro recognizes that private equity funds in Canada can have unique, distinct structures that offer various services to support portfolio company operations, thereby resulting in significant risk exposure,” said Daniel Lee, underwriting manager at IronPro for Ironshore Canada. “Private equity professionals who manage funds by taking calculated investment risks should consider specialized insurance to protect themselves and the funds' indemnity obligations that arise through normal business activities.”
Litigation, regulatory investigations, and prosecutions in the Canadian marketplace have raised awareness of fund management obligations and exposure to a range of liability issues inherent in complex investment vehicles. The policy features protection for outside directorship liability, designed to protect executive exposure when assuming leadership positions on boards of fund investment entities worldwide. IronPro said that the broad definition of a fund within IronPro's private equity liability insurance product includes all funds listed in the application, including “forgotten funds,” as well as newly created or acquired funds when similar to existing, covered fund structures. The company said that product coverage has fewer policy exclusions than comparable insurance plans, and does not have a restrictive professional liability trigger tied to professional services offered by the private equity fund on behalf of portfolio companies.
IronPro's product provides for 100 percent allocation of defense costs within the policy limit and does not exclude pollution liability risks, according to the company.
“The private equity and venture capital industries are vital to Canada's economic health,” said Dane Hambrook, vice president at IronPro and mergers and acquisitions insurance at Ironshore Canada. “We are pleased to provide solutions such as our private equity liability policy to help mitigate Canadian fund managers' operational risk exposures, along with mergers and acquisitions solutions, such as representations and warranties insurance, to limit their post-closing indemnification liabilities, facilitate the distribution of deal proceeds, and enable the redeployment of risk capital into the Canadian and global economies.”
Learn more: www.ironshore.com.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].