Why FinTech companies need bespoke insurance solutions
A tailored approach is essential to ensure full protection
Kieran McKenna explores the case for a tailored FinTech insurance product
As the FinTech industry continues to evolve at a remarkable pace, firms within this space face a range of unique and emerging risks. These risks often fall outside the scope of traditional insurance products, meaning that a more tailored approach is essential to ensure full protection.
Whilst standard insurance solutions can offer basic coverage, FinTech businesses require bespoke insurance products that reflect their specific operations, regulatory environment, and technological dependencies.
The case for a tailored FinTech insurance product
For many FinTech Companies, relying on traditional Technology or Professional Indemnity insurance may leave critical coverage gaps. Traditional Technology Insurance often excludes liabilities that are central to FinTech operations - for example, Professional Indemnity risks that arise from the distribution of financial advice.
Even if these exposures are insured separately, grey areas can emerge - such as exclusions for:
- Breach of contract
- Sub-contractor liabilities
- Intellectual property (IP) infringement
Similarly, Cyber Insurance is best placed within a bespoke FinTech product, given the overlap between Professional Indemnity and Cyber exposures. A modular, single-product solution minimises these risks by ensuring consistent coverage across all areas, reducing the chance of claim denials, delays, or the need to pay multiple excesses.
Key risks facing FinTech companies
A tailored FinTech insurance product can be designed to protect against a wide range of exposures, including:
Professional Indemnity
FinTech firms offering innovative products or digital financial solutions risk facing claims resulting from negligent advice, errors, or omissions or elements of their service that are reliant on third-parties. A bespoke FinTech policy helps ensure that coverage for both financial services E&O, and technology E&O exposures dovetail.
Intellectual Property (IP) infringement
Many financial institution based policies exclude coverage for allegations of breach of third-party IP infringement, yet this is a major exposure for FinTech Companies, for example using proprietary code or algorithms. A bespoke policy ensures you are properly protected against allegations that may be made by third-parties in connection with your IP assets.
Cyber events
FinTechs are prime targets for Threat Actors, from ransomware attacks to denial-of-service attacks, it is vital that those businesses are adequately protected. A comprehensive policy covers direct instant incident response costs, consequential losses arising from business interruption and potential third-party losses.
Unforeseen technology failures
As we have seen in recent times, when technology is central to service delivery, even a short outage can lead to lost customers or income. Bespoke cover ensures protection from loss of revenue and reputational damage resulting from system downtime.
Theft of funds
Given the high volume of financial transactions FinTech companies process, internal or external theft remains a significant risk. Robust coverage protects your business against these potential financial losses.
Regulatory risk
As the regulatory landscape shifts globally, compliance requirements are becoming more complex. Tailored insurance support helps FinTech companies navigate these changes and mitigate regulatory and operational exposure.
We’re here to help
At PIB, we work with a diverse range of clients across multiple sectors, but our expertise in the FinTech space truly sets us apart. We understand that every FinTech business is different, which is why we partner with a select group of specialist insurers capable of providing bespoke FinTech insurance solutions.
Through these strong, long-standing relationships, we can offer:
- Comprehensive and flexible coverage
- Eradicate gaps that would otherwise exist between different policy types
- Confidence that your unique risks are understood and protected
Ready to protect your FinTech Company?
If your business operates in the FinTech space and you’re unsure whether your current insurance truly covers your potential exposures, it may be time to explore a bespoke solution.
Talk to Kieran McKenna for a no cost review of your arrangements and learn how we can help safeguard your business against emerging risk.