Technical Specifications – IMI (05-07)
This is a summary of the key features of Liberty’s new Investment Managers Insurance Policy Wording (05-07). It should not be relied upon to fully understand the extent of coverage provided by the policy. In order to gain that understanding you must read the policy wording in its entirety. A specimen of the policy wording is available for downloading at www.liuaustralia.com.au
Policy Structure
The Table of Contents at the front of the wording will assist you in understanding the overall structure of the policy. The wording starts with Sections 1 to 5 which respectively contain the Definitions, Extensions, Exclusions, Claims Conditions and General Conditions which apply all Parts of the policy. The Parts of the policy are comprised of the following: Part A – Professional Liability Part B – Managerial Liability Part C - Crime As a result of this structure, in order to understand the full extent of cover provided under Parts A, B & C it may be necessary to refer to certain clauses contained in Sections 1 to 5. Some key features of the policy are described below and the number of the relevant clause is specified in brackets.
Continuous Cover
Cover is provided for Claims resulting from facts which the Insured has inadvertently failed to notify during a prior policy period provided the Insured has been continuously insured with Liberty since first becoming aware of those facts (Extension 2.2).
Order of Payments
If there is insufficient limit to cover all Claims under the policy then Liberty will give priority to Claims against Insured Persons (Claims Condition 4.3).
Severability of Proposal
Failure by one Insured to comply with its duty of disclosure will not prejudice the right of another Insured to cover (General Condition 5.3).
Non-Imputation Limits & Excesses
The policy provides separate limits of liability for Parts A, B & C and sub-limits of liability for various extensions under Parts A and B. These limits and sub-limits are all subject to an aggregate limit of liability for the policy as a whole. All limits are specified in the Policy Schedule along with the Excesses which apply to Parts A, B & C.
The conduct of one Insured will not be imputed to another Insured for the purposes of determining the availability of cover under the policy (General Condition 5.4).
Professional Liability Cover
Part A provides cover for Claims “alleging an act, error or omission of the Insured in the provision of Professional Services” (Insuring Clause A1.1). This cover is provided on a claims-made and notified basis (Definition A5.2).
Cover for New Funds
A 60 day window is provided for any newly established fund, trust, managed investment scheme or investment mandate sponsored by the Named Insured to allow underwriting information to be submitted and reviewed by Liberty (Extension 2.1).
Professional Services
Professional Services is defined broadly to include a range of advisory, investment management, funds management and trustee services relating to investments in connection with any Insured Fund (Definition A5.13).
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Technical Specifications – IMI (05-07)
Advance Payment of Defence Costs
We have sought to align the cover as closely as possible between Parts A & B to ensure a seamless cover. As a result of this approach a unique feature of the wording is the payment of Defence Costs in respect of Claims covered under Parts A & B of the policy “as and when they are incurred” (Insuring Clauses A1.2 & B1.3).
Definition of Insured
The definitions of Insured under Part A (A5.7) and Insured Person under Part B (B5.7) are both set broadly to include past present and future Directors, Officers and Employees and members of any committees including members of compliance committees.
Senior Counsel Clause
Inquiries Cover
Another area of alignment between Parts A & B is cover for costs incurred in preparing for and attending an official inquiry be it professional or managerial in nature (Extensions A2.6 & B2.1).
Extended Policy Period
Under Parts A & B the Insured will not be required to contest any Claim unless a Senior Counsel recommends it. If Senior Counsel recommends settlement the Insured may elect to defend a Claim, however, Liberty’s liability will be limited to the amount the Claim could have been settled for (Claims Conditions A4.4 & B4.4).
Under Parts A & B the Insured can request an 84 month extend policy period in the event of a Change in Control to enable notification of Claims resulting from conduct committed prior to a Change in Control (Extensions A2.9 & B2.9 & Definition 1.2).
Subsidiaries
Under Part A cover is provided for past and present subsidiaries at the commencement of the policy period (Definition A5.15). Under Part B in addition to this, cover is provided for certain New Subsidiaries (Extension B2.7). Under Part C cover is provided for the Named Insured and all subsidiaries it has at the commencement of the policy period (Definition C4.14).
Standard PI Extensions
A2.1 A2.2 A2.3 A2.4 A2.5 A2.7 A2.8
Other standard extensions under Part A are: - Loss of Documents – Defamation – Trade Practices Act – Joint Ventures – Vicarious Liability – Intellectual Property Rights – Fraud & Dishonesty
Pecuniary Penalties
Defence & Settlement
Under Parts A & B the Insured is given the choice of requesting Liberty to defend Claims or to appoint its own solicitors to defend Claims, subject to Liberty’s approval (Claims Conditions A4.2 & B4.2).
Sub-limited cover is provided for civil pecuniary penalties Insured Persons are required to pay pursuant to the Corporations Act as a result of a claim covered under Part B (Extension B2.2).
Statutory Compensation
Allocation
Under Parts A & B this clause has been drafted to ensure it aligns with recent case law and minimises the potential for disputes over allocation (Claims Conditions A4.3 & B4.3).
Full limit cover is provided under Part B in respect of compensation payable by the Insured as a result of civil penalty proceedings brought under certain Australian and New Zealand legislation (Definition B5.8).
Standard D&O Extensions
B2.3 B2.4 B2.5 B2.6 B2.8 – – – – –
Other standard extensions under Part B are: OH&S Defence Costs Pollution Defence Costs Shareholder Pollution Claims Spouses & Estates Outside Directorships
Management Liability Cover
Part B provides D&O and Company Reimbursement cover for a broad range of Wrongful Acts (Insuring Clauses B1.1 & B1.2 and Definition B5.15).
Preservation of Indemnity
Liberty will indemnify the Insured Persons where the Company fails or refuses to indemnify them for a Loss otherwise covered under Part B of the policy (Claims Condition B4.5).
Fraud & Dishonesty
Under Parts A & B exclusions in respect of illegal conduct will only apply where there is an admission or official finding that such conduct did in fact occur (Exclusions A3.5, B3.1 & B3.2).
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Technical Specifications – IMI (05-07)
Crime Cover
Subject to certain requirements set out in Insuring Clause C1, Part C provides cover for loss of money and securities sustained by the Insured resulting from the fraudulent, dishonest or malicious acts of its Employees and certain Illegal Activities (as defined in Definition C4.6) of other persons.
Investigation of Loss
Part C provides a mechanism for the Insured and Liberty to appoint an independent Investigator to establish the cause and quantum of a Direct Financial Loss. Loss investigation costs are not subject to the Excess and are payable in addition to the limit.
Underwriting Requirements
A completed Liberty IMI Proposal Form which is available for downloading at www.liuaustralia.com.au Information Memoranda or Product Disclosure Statements for all funds, trusts, managed investment schemes, investment mandates or the like for which cover is sought A sample Compliance Plan Latest Annual Report of the Fund Manager including audited financial statements A copy of any Trust Deed A Business Plan if the Proposer is a start-up operation The Annual Report for each fund, trust, managed investment scheme, investment mandate or the like for which cover is sought Any Quarterly Update of the fund performance CV’s of any key personnel CV’s of compliance committee members
Liberty Contacts
Louisa Groos Alison Chiang Marcus Thomas Chris MacLean Ann Dang Mike Dreyer Christian Manning Warwick Hansen Suzanne Ross Direct Line: Direct Line: Direct Line: Direct Line: Direct Line: Direct Line: Direct Line: Direct Line: Direct Line: (02) 8298 5901 (02) 8298 5906 (02) 8298 5846 (02) 8298 5824 (02) 8298 5866 (02) 8298 5821 (03) 9619 9803 (03) 9619 9817 (07) 3235 8817 Sydney Sydney Sydney Sydney Sydney Sydney Melbourne Melbourne Brisbane
The information in this document is presented by Liberty International Underwriters (a trading name of Liberty Mutual Insurance Company ABN 61 086 083 605 Incorporated in Massachusetts, U.S.A. The liability of members is limited). The information provided here is only a summary of the coverage provided by the policy and should not be relied upon in any way. Nor should it be relied upon as a substitute for the actual policy wording. Refer to the policy wording for the complete terms and conditions. This information is accurate as at 18 May 2007.
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