IRISH insurance brokers Roberston Low have launched a unique investment insurance product to be rolled out to Irish investors over the coming months.
The product, called FundInsure, is believed to be the first of its kind in the world, and will afford policy holders a significantly higher level of protection on their investments, over and above what is currently offered by the State Compensation Scheme.
According to Robertson Low, investors who take out the policy will benefit from a substantial level of insurance cover that will see their investments protected should there be a financial and or operational failure within their investment firm or stockbroker.
Speaking at the launch of FundInsure, Andrew Low, Managing Director of Robertson Low, said: “While recent years have seen considerable improvement in the regulation and supervision of investment firms in Ireland, as acknowledged by the European Parliament and the Council of the European Union, no system of supervision can provide complete protection for investors, particularly in the event of fraudulent intent.
“History has shown that even the most reputable of investment firms are susceptible to the risk of financial failure and the loss of client assets, whether from poor corporate governance, from the fraudulent acts of committed individuals or topically, as a result of cyber-attack.
“We are convinced of both the appetite and the need for a product of this kind, not just in Ireland, but in many countries around the world.
“We believe it has the power to revolutionise the investment market — giving investors a far greater level of confidence and independent security, which should enable them to trade more comfortably.”
Research commissioned by Robertson Low, in advance of the development of FundInsure, found that Irish investors can be complacent when it comes to considering the risk to their investment or pension fund should their investment firm suffer a financial failure.
Commenting on the research findings, Andrew Low, added: “What was evident was that Irish investors have a tendency to overestimate the level of protection they currently have.
“As it stands, should an investment firm authorised in Ireland go out of business and be unable to return investments or money that it owes to clients, the Investor Compensation Company DAC (ICCL) is there to compensate ‘Eligible Investors’ only, for 90% of their loss, up to a maximum of just €20,000. An eligible in vestor is regarded as a private customer of a failed investment firm,
“Professional Investors, regarded as clients of the investment firm who the investment firm can show to have sufficient and appropriate expertise in investments to be categorised as a ‘professional investor’ and who have acknowledged in writing that they have been made aware of the consequences of being so categorised and other defined investors are specifically excluded from the State compensation scheme.”
“FundInsure is an insurance product designed to provide an investor independent protection over and above the maximum compensation limit of €20,000 provided by the State Compensation Scheme for ‘eligible investors’, in addition to providing protection for ‘professional investors’ who are currently not afforded any protection under the State Compensation Scheme.
“Investors can insure the first €250,000 of loss of their investments following the financial failure of their investment firm and its subsequent inability to return client assets.
“It is designed to allow both ‘eligible’ and ‘professional’ investors insure against a situation where an investment firm would be unable to discharge its duties, in the event of its financial failure, in relation to money held by the Investment Firm or investments held, administered or managed by that Investment Firm, and against loss arising from theft, misplacement, destruction, burglary, robbery, embezzlement, wrongful abstraction, larceny, false pretences and fraud.”