Is FinTech insurance right for my business?
Find out the true value of insurance for FinTech companies.
The rapid development of the FinTech market is improving financial service offerings for the end consumer. However, companies involved in this pioneering sector should be aware of the risks and exposures that come with operating in such a new marketplace. They should have effective insurance in place so they can continue to focus on offering innovative products to their customers.
To highlight the true value of insurance for FinTech companies, here are four reasons why buying a fit-for-purpose insurance policy is the right decision for your business.
You are vulnerable to technology exposures
Innovative technology is the backbone of FinTech companies - it is how they disrupt traditional financial services, and with this comes heavy reliance on technology infrastructure which is prone to vulnerabilities. Technology failure can mean that customers are unable to access services in a timely manner, resulting in loss of income or customers. Traditional financial institutions policies are not fit-for-purpose for these emerging technology risks., A FinTech policy provides coverage for both financial services and technological exposures.
You rely on multiple policies in the event of a claim
If a FinTech company opts for multiple policies, it leaves itself open to the risk of a slow and complex claims experience. This process can be especially difficult if multiple coverages are triggered at once. A single policy designed specifically for FinTech is also usually a more cost-effective solution than multiple policies covering different exposures.
Your business is a target for cyber criminals
Given the nature of their operations, FinTech companies are prime targets for cyber criminals. Network security and data breaches, as well as damage and rectification costs are common in cyber-attack incidents. In particular, the number of ransomware attacks on British companies has doubled in the past year alone and the estimated global ransomware damage cost for 2021 was valued at $20bn.
You are responsible for meeting regulators’ requirements
As the FinTech market continues to evolve, so will the expectations of regulators. Nowadays, it is not uncommon for regulators to require companies to purchase professional liability (PI/E&O) insurance. In some cases, companies that are found to have inadequate PI insurance will also be in breach of their capital requirements. Clients and prospective partners might even insist on comprehensive liability coverage before any deals are done.