The FinTech market is growing rapidly in the UK and so to are the opportunities. But new opportunities pose different risks associated with companies operating in this sector. It is vital that you have the best insurance cover in place, not just a policy that ticks a box.
FinTech companies have insurance risks that traditional insurance policies will struggle to provide meaningful protection. These policies don’t cover liability arising from the failure of technology, sub-contractor liability or IP infringement, while technology policies aren’t likely to cover exposures from the provision of financial services products or advice and are unlikely to offer the management liability cover that most financial organizations would expect.
It is imperative for Fintech business to maintain trust, not just with its clients but all stakeholders. A robust insurance policy is necessary to help maintain that trust and also provide peace of mind should something bad happen.
Through our experience with Financial Technology insurance, we consider the following risks to be the most important to insure against.
Professional Indemnity & Liability
Negligent advice and failings in client services are common risks for any company providing financial services, especially FinTechs who offer new financial products through new distribution models. FinTechs can also have a reliance on third-party contractors, adding an extra liability risk due to third-party negligence.
Fintech Insurance should cover the business for such risks and protect against perceived negligence.
New technology, new products and new distribution bring a wealth of opportunities, but also new regulatory exposures. FinTech companies will need to ensure they keep on top of the implementation of suitable and satisfactory risk management systems. As the FinTech market evolves, so will the regulatory environment. A major risk for FinTechs will be keeping pace with the regulators’ latest updates. FinTechs will have to contend with differing regulations in multiple territories should they operate internationally.
A well-designed policy should help navigate this landscape but also protect against any errors a business could make along the way.
Theft of Funds
The majority of FinTechs deal with a high frequency of funds movement. High volumes of payments, transactions and customer accounts, as well as the fast growth and implementation of new technology, leave them vulnerable to theft. These thefts could be by an employee or an external party.
Fintech Insurance can cover both eventualities and provide satisfactory peace of mind should an event occur.
Given the nature of their operations, FinTech companies are prime targets for cybercriminals. Network security, data breaches or even a denial-of-service attack – as well as damage and rectification costs following these incidents – should be a major concern for FinTech companies.
A strong insurance policy doesn’t only cover the cost should an incident happen. It will provide access to some of the countries leading specialists to help manage and reinstate the services. Not only will they help reinstate services they will also look to provide structure to make sure these risks are managed moving forward.
Innovative technology is essential for FinTech companies – it is how they have disrupted traditional financial services – but this heavy reliance on technology infrastructure means firms can be vulnerable. Technology failure can mean customers are unable to access services resulting in lost income or lost customers.
Insurance designed well will understand the risks faced by the business and protect the business from these exposures.
We can arrange tailored policies to manage your evolving risks which protect against liability arising from financial services and technology services, as well as management liability, theft of funds, professional indemnity and cyber coverage.
Please contact us