PRODUCT: Financial Institution Bond for Asset Managers

COMPANIES: Federal Insurance Company, Chubb Insurance Company of New Jersey (NJ domiciled risks only), and Chubb Custom Insurance Company (surplus lines only)

BEST RATING: A++ (Superior)

AVAILABILITY: Available to Chubb-appointed brokers and agents in the United States and Canada, as well as the wholesale marketplace via Chubb’s Westchester operations.

FOCUS: Chubb has been the largest underwriter of fidelity bonds in North America since 2001, according to the Surety and Fidelity Association of America.

Chubb’s Financial Institution Bond for Asset Managers provides an integrated financial fidelity solution that aligns traditional fidelity bond coverage with modern exposures, such as modern electronic and computer crime and funds transfer fraud coverage, including social engineering fraud.

COVERAGE DETAILS: Social engineering of employees and the impersonation of customers and vendors have become more commonplace. Chubb’s integrated financial fidelity insurance solution is a prudent risk management technique to help protect against such risks.

“Standard fidelity bond offerings have not kept pace with the changing exposures and complicated structures of today’s asset manager,” says Christopher Arehart, senior vice president, Chubb. “The Financial Institution Bond for Asset Managers is unique in that it is the first product specifically tailored to this important sector and addresses modern risks, such as the customer’s capital and social engineering fraud, in the base form.”

The product covers the loss of a customer’s capital due to the dishonest acts of an employee; financial loss resulting from unauthorized access into the firm’s computer system by hackers; the transfer of the firm’s capital or its customers’ capital through fraudulent instructions over the internet, email, or the telephone; and the impersonation of an employee or known vendor that causes the firm’s funds to be fraudulently transferred by an authorized employee.

The expanded social engineering fraud coverage includes both customers’ and the firm’s funds. In addition, the policy provides coverage for computer investigations and expenses associated with a covered incident. The product also provides coverage for employee theft of customers’ money that is not in the custody or control of the asset manager.

UNDERWRITING: Underwriting requires a specific application tailored to the risks covered by the bond. Applicants may be asked to provide supplementary financial information and regulatory filings, either directly or via reference. Loss history will also requested and reviewed in the application process.

MINIMUM PREMIUM: N/A

TARGET: Asset managers of all sizes, including but not limited to registered investment advisors, private equity and venture capital firms, hedge funds, and real estate funds.

COVERAGE AVAILABILITY: Currently available on an admitted basis in 48 states with pending regulatory approval in Colorado and Washington. It is also available in Alaska on a non-admitted basis.

COVERAGE TERRITORY: Coverage is available to customers domiciled in the U.S. and Canada, responding to loss sustained anywhere in the world.

CONTACT: For underwriting inquiries, contact Christopher Arehart, senior vice president, Chubb.

Will Jones is IA managing editor.