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SIX Fund Liability Program: A Tailored Solution

Building on the success of the SiX program for PE/VC backed companies, Vanbridge has launched the SiX Program for Fund Liability. The insurance coverage for Private Equity and Venture Capital Funds is intended as a last line of defense to protect the General Partners and employees of the Fund.  It also protects the Limited Partners from having to indemnify the General Partners and employees if they are drawn into litigation.

The proper solution combines Directors and Officers, Errors and Omissions, Employment Practices and Outside Directorship liability into a single policy form. The problem is that in order to solicit options from multiple carriers, the client, their broker and perhaps the client’s counsel, needs to try and compare multiple policies that may have 50 pages of additional endorsements. The typical alternative is to negotiate a manuscript policy with a single carrier. This approach can lead to a good result in year one, but it tethers the fund to the insurance company, regardless of changes in the market.  This imbalance can create a real problem for PE/VC Funds that need these policies to respond if a significant loss occurs.

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The Vanbridge Solution . . .

Vanbridge has developed a common manuscript form for Private Equity and Venture Capital Funds
that has been accepted by three A-rated insurance carriers.

The Benefits of the Program:

  • Common Form – Negotiated in conjunction with leading law firms, the common form provides for the breadth of coverage that leading private equity and venture capital firms seek.  With a common form, consistency of coverage is a given.  When policies are purchased through the Vanbridge program, you only have to know the pricing, limits and exclusions (if any) – obviating the need for expensive, time-consuming insurance policy reviews.
  • Choice Every Year Because the carriers all use the same policy form (which is updated regularly) the Fund has options every year. This prevents the carriers from taking the client for granted, simply because a manuscript policy is in place.
  • Best In Class Coverage—  Broad definition of Claim with formal and informal investigation coverage, broad severability wording, blanket ODL coverage, full severability of the exclusions and application and comprehensive definition of Professional Services.
  • Open Brokerage – Vanbridge is broker-neutral, any broker can access the Vanbridge program.
  • Administration – The program will be managed and administered by Vanbridge. As the program manager we make sure the quotes are accurate and the administration goes smoothly.
  • Added Leverage – If a participating insurer does not provide adequate service, the insurer will be removed from the Vanbridge program.  As such, Vanbridge can wield more leverage than any single firm or any portfolio company.
  • Superior Service – Freed from negotiating each and every term of the D&O contract on a policy-by-policy basis, brokers can better focus on advising their clients and providing superior service.

The end result is better for everyone involved…

…Private Equity Fund gets broad coverage, choices and consistency at a low price.

…Retail broker retains his client and provides a high quality product.

…Underwriter gets a high hit ratio and long term clients.

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