Fintech Insurance

Creating new products or services, underpinned by new technologies and business models, inevitably imposes enhanced risk on a company, its directors and its investors. Directors may face unlimited personal liability in certain circumstances. Companies face a range of operational risks, as well as risks relating to intellectual property and transactions. Thankfully, many of these risks can be transferred to insurers, so a well-constructed insurance programme may offer significant balance sheet protection. Some core considerations are set out below:

Core risks

FinTechs face an intersection of risks that financial services and technology companies have always faced: Errors and Omissions (Professional Indemnity/Liability), Crime and Cyber are core risks that could impose significant unplanned costs on your business.

We understand fitting new business models into standard insurance market products can lead to gaps or overlaps in cover.

Impact of novel technologies

FinTechs often harness novel technologies, such as AI and blockchain. This is likely to change the severity and/or velocity of many existing risks faced by ‘traditional’ financial services models, not least because of emerging or uncertain regulatory environments.

We work with FinTech risk and compliance managers to understand the liabilities and insurance implications of novel technologies.

Regulations

Regulated FinTechs could face the cost of a regulatory investigation, fines and remediation costs. These may be met by a well-constructed professional indemnity policy.

Even FinTechs (or Regtechs), who are not directly subject to regulation may face enhanced liabilities as they are likely to be providing services to companies who could face a regulatory breach if the services fail to perform.

Intellectual Property

IP is a key driver of FinTech value. Insurance may help protect from the costs of alleged or actual IP infringements. It may also act as a ‘proactive protection’ to strategically pursue litigation against established competitors who may have more resources.

Aon’s IP team can also help you identify and articulate the value of your IP.

M&A and IPOs

Whilst an exit strategy may not be at the forefront of a companies plans during launch, Aon recognises that for many founders this is a critical area of concern. Our M&A team is on hand to assist with structuring a risk transfer programme around developments that may arise.