ICI, ICI Mutual Release Claims Trends Report
The ICI and insurer ICI Mutual released their annual report “Claims Trends” covering January 2021 through March 2022. The report finds that notwithstanding a 2021 year-over-year decrease in the number of claims submitted by ICI Mutual’s insured fund groups under D&O/E&O policies, the frequency of claims reported “remained within historical norms.” Approximately 40% of ICI Mutual’s insured fund groups submitted at least one claim notice between 2017 and 2021, suggesting that claims frequency remains an issue for the fund industry. The report notes “the severity of new claims can be more difficult to assess, particularly for civil lawsuits and regulatory proceedings, where it may take years to establish the magnitude of losses (in the form of defense costs, settlements, and judgments)” and costs of litigation remain significant. Regulatory matters, closed-end fund matters, and fund shareholder demands for inspection of books and records constituted the most common subjects of claims notices submitted under D&O/E&O policies in 2021. Regarding enforcement actions, the Commission brought over 400 stand-alone enforcement actions, focusing on “protecting retail investors and holding entities and individuals accountable for their misconduct.” The SEC’s Division of Exams completed over 3,000 exams and issued 2,100 deficiency letters, while making 190 referrals to the Division of Enforcement.