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 face unlimited personal liability in many jurisdictions. 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 can 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. Moreover many clients/partners will insist on certain levels of cover before contracting.
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. Many of these can 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 a FinTech’s value. Insurance can help protect from the costs of alleged or actual IP infringements. It can 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, allowing you to unlock additional capital.
M&A and IPOs
Whilst an exit strategy may not be at the forefront of a company’s 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 whatever developments may arise.
FinTech specialists
Our FinTech team sits within our Financial Institutions Group in London, serving a wide range of clients from early stage to exit and IPO. We combine the benefits of a specialist sector knowledge, with the ability to harness Aon’s wide range of risk capabilities and leverage in the insurance market.
Ed Pugh
Aon UK FinTech Development Director
Tom Davis
Aon UK FinTech Executive Director
Luke Speight
Aon UK FinTech Client Director