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What has prompted an upturn in investment management claims?

Ruth Willmington

Insurance claims made by investment managers and administrators post-pandemic and referred to us at ASL are increasing. These relate to both first- and third-party loss. The claims themselves can be complicated. They often involve challenging aspects relating to policy cover, especially surrounding the ownership of funds, as well as complex quantum calculations. Understanding the industry, the relationship between investment managers, their clients and other professionals, as well as being able to competently analyse the claim, is key.

Claims we have dealt with over the last six months have included the following attributes:

  • Social engineering frauds taking advantage of changes in working environments and resulting in insureds inadvertently paying funds to criminal third parties.
  • Discovery of circumstances resulting from a closer scrutiny of performance over a turbulent year.
  • The loss of investment funds due to the incorrect execution by insured parties of trading strategies and portfolio re-balancing.

Whilst the number of claims we have seen in this area has increased, how closely this is aligned to the pandemic is still unclear.  Is this the result of Covid-19 or a trend in claims being made under comprehensive Investment Management Insurance policies that would have occurred regardless of the virus? What is clear is that the value of funds handled by these entities is large and this will always present opportunities for fraudsters as well as exposure to substantial third-party claims.

March 2021
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