FINEX SURVEY: AIFMD Requirements Will Increase Operational Risks

A recent poll of financial institution insurers found that 65 percent believe that the Alternative Investment Fund Management Directive (AIFMD) will increase Alternative Asset Managers’ operational risks.

Furthermore, the survey carried out by Willis’ Financial and Executive Risks Practice (FINEX), revealed that no one expected the insurance premiums of affected asset managers to reduce as a result of the operational risk management and investor protection elements.

To request a copy of the survey results please click here.

What Next?

Willis’ FINEX commissioned the survey because we felt the practical consequences of AIFMD on Professional Indemnity Insurance (PII) had not been satisfactorily explored. The survey covered the impact of AIFMD on operational risks and the Professional Indemnity insurance policies of alternative asset managers, including hedge fund managers.

Following the results of the survey, the Willis FINEX team, together with a specialist AIFMD consultant have established an educational forum with many leading asset manager insurers to gain a deeper understanding of the survey results and discuss potential ways to mitigate the operational risk concerns together with the perceived negative consequences of AIFMD.

The Early Bird Catches the Worm

Being able to differentiate operational risk exposures will help enable hedge fund managers to obtain better insurance coverage at the most competitive premiums. It is therefore crucial to begin the insurance renewal process early, while ensuring advice is provided by an experienced insurance broker who understands the issues surrounding AIFMD and the operational risk concerns.

About Paul Richards

Paul is Executive Director and Co-FI Practice Leader in Willis Towers Watson's FINEX Global division. Based in Lon…
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