New insurance provider Apsley Specialty has teamed up with PartnerRe to launch a specialist underwriting service to the hedge fund sector to deal with the new AIFMD requirements.
The agreement, which has a long term potential, was signed between the parties at the end of 2013.
Recent changes to the AIFMD now dictate that the majority of hedge fund managers must have liability risk insurance cover in place by 22 July 2014. Apsley is one of the first firms to offer these services to the European fund management industry.
Apsley will be backed by PartnerRe, the international reinsurance company, who will be a capacity provider for the project.
The Directive requires that AIFM’s comply with the rules by holding the appropriate ‘additional own funds’ or ‘professional indemnity insurance’ to cover potential risks created from professional negligence.
James Lawrie, who will head up the business as executive director, has more than 10 years’ experience including time at Towers Watson and Caliburn Capital Partners. Lawrie has a detailed knowledge of both sides of a very specialist insurance and hedge funds industry, having earlier spent five years in the financial institutions insurance market.
Lawrie says: “These changes to the AIFMD will bring about new challenges and opportunities for the hedge fund industry. It’s a major development for fund managers as they’ll need to make sure they comply with the new regulations and our solution will allow them to do this.
“Given our market position and expertise, and with the backing of PartnerRe we believe we are ideally positioned to provide hedge fund managers with the service and security required.”
Marc van der Veer, general manager at PartnerRe Wholesale, says: “This is a very exciting venture. This is a market driven by mandated regulation and investors will expect managers to have this liability risk cover. We expect this to be a significant growth area for the insurance industry in the coming years.
“The industry is primed for growth and with pressure likely to come from the end investor; cover for liability risk is something hedge fund managers can no longer ignore. Apsley has great experience and we’d expect them to be hedge funds’ first port of call for these services.”
