Everything you need to know about fintech insurance
Money, technology, and confidential personal information form the core of all fintech businesses. This potent trio opens the sector up to various critical risks, including cyber threats and theft. While personal indemnity insurance is an essential and often mandated requirement for firms in the financial sector, more comprehensive insurance policies alongside excellent crisis management are equally important when it comes to managing and mitigating risk.
In case an unfortunate incident like a cyber breach occurs, a business’s immediate response could mean the difference between survival and disaster – and this is why crisis management needs to be looked at proactively rather than retrospectively.
Directors’ and officer’s insurance is another important consideration for fintech firms, to offer personal protection and attract top talent.
The Role of Crisis Management in Fintech Insurance
During a cyber attack, time is crucial. Every second that an attack is unaddressed creates more damage. This is where crisis management plays a role. A crisis management team consists of a group of experts that are available around the clock, ready and prepared to respond to any type of security breach or attack as soon as it happens.
In the event of a data breach, a good crisis management team will address multiple areas simultaneously, working to contain the damage as well as offer guidance to identify what data has been compromised and what steps need to be taken. They also assist in activating mandatory notices to regulatory and legal bodies and keeping them informed. Once the immediacy of the crisis settles down, it is also within this team’s remit to assist with resuming normal operations and assess the extent of damages and liability.
Due to the multi-faceted nature of a crisis management team, it’s important to have access to one that includes specialists from various fields, including solicitors, tech experts, PR professionals, insurance assessors, and others.
What Does Fintech Insurance Cover?
Professional indemnity forms the core of fintech insurance policies. Based on each business’s goals, budgets, and needs, various options can be added to this to create a more comprehensive cover that offers higher levels of protection.
Professional indemnity insurance
Professional indemnity insurance normally covers claims that arise when businesses fail to provide the services they have promised clients. These failings could come from bad advice, poor service like arranging inadequate security against a loan, or other types of negligence. As a general rule, this policy should cover compensatory damages, including the defendant’s own legal fees as well as the claimant’s fees that may be awarded against the defendant. It could also extend to regulatory investigations made against the business.
What it does not cover include theft and data or network security incidents.
This insurance may be a mandatory requirement set out by a regulator.
Directors’ and officers’ liability
Disgruntled shareholders, employees, creditors or regulators may bring forward allegations of wrongful conduct by directors or officers in their official capacity. Directors’ and officers’ liability covers the costs involved in their defence and protection. It could also include reimbursements for companies that are contractually bound to indemnify their directors.
Theft
Policies that cover theft include the theft of money as well as any other financial instruments, depending on what a business chooses to add to their plan. Usually, it covers both electronic and non-electronic thefts. It could even be comprehensive enough to include the costs of dealing with extortion attempts or digital threats against a ransom.
Cyber liability and loss
Cyber attacks and threats are increasingly common and pose a growing threat to fintech firms. Fintech Insurance policies that cover cyber liability and loss generally offer protection against attacks by hackers, incidents of viruses, and data breaches. Depending on the choice of cover, it could also include the costs of managing the breach, restoring IT systems, and business interruption.
Fintech companies handle sensitive data and valuable financial instruments. A comprehensive fintech insurance cover can help businesses in this space manage major setbacks like cybercrime, theft, or lawsuits.
Get in touch with us at Beneple to explore the best fintech insurance for your business.