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ICI Releases Claims Trends for 2016-2017

Insurance firm ICI Mutual, which represents approximately 60% of fund industry assets under management, recently released its Claims Trends for the January 2016-March 2017 period. The publication reviews insurance claims activity in the fund industry as well as recent litigation trends and regulatory activity. ICI Mutual reported that claims frequency continues to be an issue for the industry and observed significant regulatory activity by the SEC. In 2016 the insurer observed a modest decrease in the overall number of claims submitted by the fund groups it insures under their directors and officers/errors and omissions (D&O/E&O) policies. Over one quarter of ICI Mutual’s insured fund groups submitted at least one claim notice in 2016, and, over the five-year period 2012-2016, nearly two-thirds of insured fund groups did so. ICI Mutual also reported that regulatory matters (26%), followed by fee lawsuits (23%), constituted the most common subject of claims notices provided under ICI Mutual D&O/E&O policies in 2016. With respect to insurance payments by ICI Mutual on claims submitted over the 10-year period from January 1, 2007-December 31, 2016, defense costs were the largest portion (44%) with settlements and judgments coming in second (43%), and costs of correction (13%) third.