Risk Managers


Insurance risk managers play a critical role in identifying operational risks and in developing robust insurance programs to protect their fund groups from associated financial loss.  As a resource for the fund industry, ICI Mutual provides insurance risk managers with valuable information on the specialized risks faced by funds, fund directors and officers, and fund advisers, and on available options for insurance coverage to mitigate these risks.  In addition, ICI Mutual assists risk managers in  benchmarking their fund groups’ insurance programs against programs of their peers, and in following relevant developments in the broader insurance markets.  ICI Mutual also hosts an annual risk management conference to alert insurance risk managers to new and emerging fund industry risks, and to promote networking with risk managers from other fund organizations.

Insurance risk managers trust in the availability and responsiveness of the ICI Mutual staff.  ICI Mutual’s underwriters work closely with insurance risk managers at each step of fund groups’ annual insurance renewals, from application through policy issuance.  Insurance risk managers frequently call on ICI Mutual’s legal team for interpretations of policy language, and for assistance in developing specialized insurance solutions to address their fund groups’ particularized needs.  If and as claims arise, insurance risk managers also look to ICI Mutual for its claims expertise.   


  • How does ICI Mutual assess risks?

  • The underwriting process at ICI Mutual concentrates primarily on evaluating a fund complex’s legal and compliance functions, with particular attention on risk oversight and controls.  Because ICI Mutual focuses exclusively on the fund industry and fund industry risks, the Company’s underwriting questions encompass industry-specific risks (e.g.,  processes for developing adequate and accurate prospectus disclosure).   ICI Mutual’s underwriters evaluate policies and procedures, review regulatory filings, and assess reports from auditors, regulators, and internal compliance officers.  The insurance premiums and coverage terms derived from the Company’s underwriting process are risk-related and informed by years of experience and judgment.  

  • What are the most significant liability risks faced by funds, fund directors and officers, and fund advisers?

  • The fund industry’s claims experience evidences that the most significant liability risks faced by funds, fund directors and officers, and fund advisers arise from regulatory investigations (initiated by the staff of the Securities and Exchange Commission or other regulators), from civil litigation (initiated by plaintiffs’ lawyers specializing in securities litigation, or in some cases, by institutional clients), and from operations-based errors by advisers (e.g., mishandling of corporate action requests, and failures to adhere to investment restrictions).  The most severe claims often focus on alleged inadequacies or inaccuracies of fund disclosure, on alleged “excessiveness” of fees paid by funds to advisers or other service providers, on alleged failures of advisers or fund boards to adhere to their fiduciary obligations, or on alleged conflicts of interest between advisers and their managed funds or accounts.

    In fund industry claims, it is not uncommon for the insured’s legal and associated costs of defending against claims to exceed applicable insurance deductibles, and in significant proceedings or lawsuits, to reach into seven or eight figures.  Indeed, defense cost reimbursements constitute a substantial percentage of all insurance payments by mutual fund D&O/E&O insurers.  In ICI Mutual’s own experience, defense cost reimbursements have constituted more than half of all D&O/E&O claims payments made by ICI Mutual since the Company’s formation.

  • What features of ICI Mutual’s D&O/E&O insurance policy are different from the policies of commercial insurers and why are these different?

  • Mutual fund D&O/E&O insurers, like corporate D&O/E&O insurers generally, do not use a single common, standard form of insurance contract.  Moreover, during the course of the insurance application process, the standard form of an insurer’s insurance contract may be modified through the addition of separate policy “endorsements.”   As a result, mutual fund D&O/E&O policies may differ with respect to the scope of coverages afforded, as well as in the terms and conditions to which these coverages are subject.  Accordingly, comparing features of D&O/E&O insurance policies offered by different insurers typically requires an examination of the particular policy forms and endorsements at issue.  (A detailed discussion of some of the more significant features of mutual D&O/E&O insurance policies, and how these features may vary among insurers, is provided in this ICI Mutual study.)

    As a general matter, ICI Mutual’s D&O/E&O insurance policy and standard endorsements include a number of features that are either unavailable from many commercial insurers, or that may otherwise be more advantageous from the perspective of insureds.  These features include (1) ICI Mutual’s expansive definition of “Claim” (which encompasses both formal and informal regulatory investigations); (2) “first dollar” coverage for costs incurred by registered funds and other insureds in conducting shareholder derivative demand investigations; (3) expansive “non-party witness” coverage for fund independent directors; (4) full “costs of correction” coverage, without sublimits or increased deductibles; (5) specialized enhancements to address potential concerns of fund independent directors with respect to advancement and indemnification for their defense costs; (6) coverage designed to defray expenses incurred by insureds in "claim-related" internal corporate investigations; and (7) endorsements specifically addressing coverage available for "Shareholder Data Breach Events" and "Network Security Events."

  • What is ICI Mutual’s value proposition?

  • ICI Mutual Insurance Company, RRG is an "industry mutual" insurer - i.e., an insurer that is owned and governed by its member-insureds, who themselves operate within a specific industry. As an industry mutual insurer, ICI Mutual is dedicated solely to serving the insurance and risk management needs of funds, fund directors and officers, and fund advisers and their affiliates, providing them with an expert and reliable long-term alternative to the uncertainties and cyclicality to which commercial insurance markets have historically been subject.

    ICI Mutual is structured to provide enduring value to its member-insureds and to its industry. Indeed, it is precisely because of its structure as an industry mutual insurer that the Company is able to provide its member-insureds, and the fund industry as a whole, with numerous tangible protections and benefits that either are unavailable from commercial insurers, or cannot be counted on to be available from commercial insurers on a consistent, long-term basis. Please see ICI Mutual Then and Now for more detailed information.

  • What is ICI Mutual’s financial strength?

  • As a fund industry-owned and operated insurer, ICI Mutual’s management and board of directors have consistently followed a conservative approach to managing the Company’s financial aspects.  ICI Mutual’s low underwriting leverages, combined with its use of a diverse group of financially secure reinsurance partners, has enabled the Company to meet all of its claims obligations, to pay dividends to its owners, and to witness its surplus grow to a level that is far in excess of what is required to support the business it writes and of applicable regulatory requirements.

    The Company’s excellent financial condition has been recognized by A.M. Best with its “A” (Excellent) rating since 1993, the first year the Company was eligible to receive a rating.