Investment Data Services (IDS), the Cape Town-based hedge fund administration group that is now looking after over R12 billion in assets has taken the innovative step of working with Glenrand MIB to provide affordable insurance cover to its clients.
“Professional indemnity and other associated investment insurance cover is something that many smaller and individual fund managers do not carry due to the high cost,” explains IDS CEO Ian Hamilton. “However, investors generally assume that there is adequate cover.”
Hamilton adds that the cost of cover tends to be high as insurers tend to have a “one policy fits all” when it comes to financial services. “When IDS took out cover we were asked to fill in a generic application form that was not applicable to a financial administration company,” he says. “The same applied to our clients. There was no specific product to cater for the different risks.”
IDS entered into discussions with insurance brokers and employee benefit consultants Glenrand MIB in South Africa. “The discussions included their underwriters, and resulted in an insurance product for the IDS fund management clients that takes into account risk reduction through the outsourcing of administration and use of independent custodians for the separation of assets,” explains Hamilton.
Tamsin Piater of Glenrand MIB says that by working with IDS the company was able to adopt an approach to the risks that took into account the fact that IDS fund management clients reduce risk through the outsourcing of administration and the use of independent custodians for the separation of assets.
Tamsin further notes that the Financial Markets Insurance Programme the two partners have devised allows hedge fund managers contracted to IDS the benefit of discounted premiums when purchasing two different products: the Fund Manager Policy and the Director & officers Liability policy.
“The result is cheaper insurance cover for IDS clients,” says Hamilton. “Already two companies have taken up the offer.”