Professional & Management Liability Insurance Tailoring for Municipal Advisors

Municipal Advisors face unique challenges and potential coverage issues when securing Professional & Management Liability insurance contracts. The basis of these challenges is largely because Municipal Advisors are required to secure E&O insurance on a Registered Investment Advisor (RIA), or Broker Dealer, insurance contract form.

Some might ask, why is this even a problem? RIA/BD Professional Liability (E&O) carriers craft their coverage forms based on exposures, and services, advisors face under the 1940 act. Unlike Municipal Advisors who provide services under the MSRB Rule G-42. Though there may be some overlap in services, a traditional RIA E&O policy is generally not designed to cover Municipal Advisors. Here are a few examples highlighting the differences between a traditional RIA/BD E&O Form and a Crafted MA E&O Form:

As highlighted above, some services are distinctly different for Municipal Advisors vs. their RIA counterparts. As a result, failure to tailor contractual language to align with a Municipal Advisor’s risk profile could result in an uphill battle during coverage determination. Therefore, a thorough comprehension of policy language is essential for the buyer, as is the carrier’s grasp of the risks they are insuring against.

Drawing from our experience serving over 2,200 investment firms across the U.S., we’ve observed that underwriters often misunderstand the exposures of Municipal Advisors and lack proper policy terms to provide adequate coverage specific to your industry. Leveraging on our knowledge, we have developed key carrier relationships and terms to cover the risks of Municipal Advisors. It is crucial that any Municipal Advisor looks at their E&O insurance contract(s) to verify that coverage is not solely structured for RIAs and Broker Dealers, but also includes the necessary language for your suite of services to municipalities.

Golsan Scruggs is an insurance brokerage firm operating throughout the United States specializing in investment advisor E&O errors & omissions insurance (aka professional liability insurance) for RIA registered investment advisors. As one of the largest insurers of RIA firms in the U.S., we have a dedicated staff that understands the risks of the financial services industry and delivers superior results.  We make the underwriting process painless.

At Golsan Scruggs, we believe it is incumbent upon us to earn the right to be appointed as your insurance and risk-management agent. Our RIASURE process exists to serve that purpose.

Our RIASURE Review will analyze your fiduciary exposures, provide rate details and comparisons, and provide a contract comparison. No application required.

To obtain your complimentary RIASURE Review, please provide the following information or contact us at (800)273-5883. Fields marked with * are required.