the risk

The Canadian Securities Administrators (CSA) has instituted a new governance mandate with the introduction of National Instrument 81-107, Independent Review Committee for Investment Funds. The Instrument is designed to improve the governance standards of investment funds, to promote protection of investors in investment funds while fostering market efficiency.

The Instrument introduces the requirement for an independent governance body, the Independent Review Committee (IRC) for all publicly offered investment funds.

The IRC is charged with reviewing conflicts of interest that may arise between a manager’s own interests and the manager’s duty to manage an investment fund in the best interests of the investment fund. The Instrument requires there to be an independent perspective on all of the manager’s decisions that may involve or be perceived to involve a conflict of interest, this includes prohibitions relating to related-party and self-dealing transactions currently restricted or prohibited in securities legislation.

IRC members will be faced with inherent liability while carrying out Instrument mandated duties.

the Executive Risk Insurance Services solution

Executive Risk, in consultation with brokers, clients and lawyers across the country, has developed a Stand-Alone Primary, Independent Risk Transfer Solution for IRC Members specifically tailored to meet all the requirements under NI 81-107 and more!

Our IRC policy is not just limited to covering NI 81-107 exposures (as some market offerings are), it encompasses the full IRC charter and possible expanded mandate, which is vitally important.

First is the Traditional “Side A” coverage for IRC Members for Non-Indemnifiable Loss. This would be for instances where no Indemnification is available by the Investment Fund, The Fund Manager or the Parent Organization for IRC Members.

The other 2 insuring clauses are for the re-imbursement of Loss resulting from Indemnification of IRC Members by the Investment Fund or Investment Fund Manager for a covered wrongful act incurred in their capacity as an IRC member. Both the Fund and Manager may indemnify the IRC, so coverage in this area is paramount.

Why not just extend the fund manager’s D&O/E&O policy to cover the IRC?
Why not just buy a Side A Excess IRC policy?

IRC members cannot have a material relationship with the fund manager – endorsing IRC members onto the Fund Manager’s corporate D&O policy may create a perception that IRC members are dependant for coverage and give rise to concerns about “independence”

Fund managers and IRC members have separate interests and separate mandates – sharing coverage is not in the best interest of either party

Suits brought by one Insured vs. another Insured are typically excluded under standard D&O/E&O policies –how will a fund managers policy respond if the Fund Manager brings suit against the IRC, or vice versa (eg: defamation)

IRC members are not directors nor officers of the manager or the corporation, and will not be given any priority in a suit

IRC members are not able to control the insurance policy purchased by the fund manager and/or the corporation

Not having appropriate insurance for IRC members would likely discourage qualified candidates

A Side A Excess IRC policy (excess of a current D&O/E&O policy) First does not allow for reimbursement of any indemnification provided by the Fund or the Fund Manager, and secondly, may require the underlying policy to be exhausted before it pays out. This is an issue if the Fund Managers policy is ‘frozen’ by court or regulatory order.

Our IRC product is a primary insurance policy protecting IRC committee members against any liability that may be incurred in carrying out their duties as outlined in the IRC charter and mandate.

A truly independent stand-alone primary insurance solution for IRC members!

Broad Definition of “Wrongful Act” – covering the full IRC charter, not just NI 81-107!!

Indemnification Re-imbursement for Investment Fund Manager or Investment Fund when they indemnify the IRC members

No Insured vs. Insured Exclusion

Non-rescindable cover for Independent IRC members

Investigative Cost coverage

Optional Duty to Defend

Full severability of exclusions

Separate/Dedicated Aggregate Limit for IRC members

Click here for our Executive Risk detailed information sheet (72k PDF). 

We have a $10 million policy limit of liability (on a primary or excess basis). Limits may be provided in either Canadian or U.S. dollars.

our payment terms

Premiums are to be paid within 30 days of the inception date of the policy term.

Installment payments are not accepted.

back to top

contacts