Financial Times- When hedge fund manager and convicted fraudster Samuel Israel III disappeared this month, leaving nothing but the message "suicide is painless" scrawled in the dust on his car, you can be sure his life assurer did not pay out – not least because police believe he was trying to fake his death.

Another type of insurance policy might soon help investors caught up in scams such as the $400m Mr Israel sucked out of Bayou Management.

At the least, the new products being created should provide hedge fund investors with peace of mind amid widespread fear of fraud in the industry.

Today, a second insurance product begins offering hedge fund investors cover for fraud losses, as Integro, a New York insurance broker, and Amber Partners, a risk rating agency for the industry, aim to capitalise on the fear of swindlers.

"While they [frauds] are not frequent within our industry, they occur enough that it causes investors to consider it seriously," said Reiko Nahum, chief executive of Amber.

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