Fintech is a fast moving, creative and transformational industry. Founders of start-ups enter the market with the goal of solving problems and simplifying financial transactions, in turn helping millions of businesses and consumers across the world. However, for even the most accomplished founders, navigating the world of insurance can often seem like a daunting experience.
To get you started, we've outlined the core insurance covers every fintech startup should consider:
Professional Indemnity Insurance
Professional indemnity insurance (PII) provides protection for businesses that are offering services or advice to their clients.
These policies typically provide cover for claims from:
Your customers suffering a financial loss as a result of your services
Certain regulatory investigations and fines
Bespoke fintech policies will also provide cover for the impact of the failure of your technology. This cover is referred to as technology errors and omissions.
Certain businesses may be required to maintain a minimum level of cover. Under the Payments Services Directives 2 (PSD2), AISPs (Account Information Service Providers) and PISPs (Payment Initiation Service Providers) must maintain a minimum level of PII. To gain regulatory authorisation, you will need to providence evidence that you have an insurance policy in place that meets these requirements.
Our fintech team can arrange specialist insurance to meet these requirements, and ensure you take out the correct minimum level of cover.
Directors’ and Officers’ Liability Insurance
Directors’ and Officers’ Liability (D&O) Insurance provides protection for the individuals that sit on the board of a company from claims brought against them in their capacity as a director. Even as a director of a limited company, you can be held personally liable for your actions which can result in legal implications.
Claims can be brought by a variety of third parties such as investors, shareholders, and customers. The policy will also provide reimbursement to the insured company in the event they pay a claim on behalf of a director.
If your business is seeking investment, certain investors may stipulate that you have D&O insurance in place to ensure they are protected if they assume a board position. Implementing this cover can increase your appeal to investors, as it demonstrates that you have a considered your risk management procedures.
Cyber Insurance
Cyber-attacks are becoming a common theme across the financial services industry, with tech-initiated firms a popular target for hackers seeking to access consumer data. To protect against this risk, you might wish to take out a dedicated Cyber Insurance policy.
Cyber Insurance policies often have three main focuses of cover:
First-party – provides cover for response to damages to your own systems or networks
Third-party – provides cover for damages sustained by third parties following a cyber-attack, such as defence from legal action
Breach support services – provides access to 24/7 specialist advisors to support with breach advice, including software/hardware support, access to PR and legal advice, as well marketing and messaging
We’re here to help
Navigating fintech insurance can be complex. Our specialists provide expert guidance and tailored solutions that adapt as you grow. Visit our Fintech Insurance page (opens a new window)to explore your options and connect with one of the team.
For more information, reach out to a member of our team.
