Fintech companies are often situated between a combination of gnashing forces: new entrants at the bottom looking to prove themselves, and established players at the top devouring companies through aggressive M&A. The unique and volatile risk that arises requires fintech companies to properly protect themselves against these dual risks. Retaining customers and acquiring new ones creates risk that must be insulated against via IP insurance, errors and omissions, and D&O insurance.
Errors and omissions insurance may be the most important form of coverage for fintech companies because their primary role is as a professional service provider. When an individual at a fintech firm makes a mistake, a customer can claim they were harmed by that individual’s mistake, often citing a loss of money. Where you might think errors are forgivable, their traceable path in fintech can result in legal repercussions, and not all players act with reasonable ethics. A proper E&O policy protects fintech companies against this risk and others.