Professional Indemnity and Cyber Insurance for FinTech Companies
FinTech companies can face claims arising from software failures, incorrect financial information, professional errors, cyber incidents and regulatory investigations. Professional indemnity, cyber and crime insurance can work together to protect the business against these interconnected risks, subject to the terms, limits and exclusions of each policy.
Since 2011, Professional Indemnity Insurance Brokers (PIIB) has been helping FinTech businesses protect themselves against the increasingly complex risks associated with financial technology.
From ambitious start-ups to established FCA-regulated firms, we arrange tailored Professional Indemnity and Cyber Insurance designed specifically for companies operating at the forefront of innovation.
The FinTech sector is transforming the financial services industry through digital payments, online lending, embedded finance, open banking, wealth management platforms, artificial intelligence, blockchain technology and cloud-based financial solutions. However, rapid innovation also brings greater operational, regulatory and cyber risk.
Whether your business develops software, processes payments, manages financial data or provides regulated financial services, having the right insurance in place is an essential part of protecting your business, your clients and your reputation.
Do FinTech companies need professional indemnity insurance?
Professional indemnity insurance is not compulsory for every FinTech company, but it may be required by a regulator, client, investor or commercial contract. The precise requirements depend on the firm’s activities and regulatory permissions. For example, account information service providers and payment initiation service providers are required to hold professional indemnity insurance or an equivalent guarantee.
The Risks FinTech Businesses Face
FinTech companies operate within one of the most heavily regulated and technologically demanding sectors. A single mistake, cyber incident or regulatory investigation can have significant financial and reputational consequences. Some of the most common risks include:
Professional Negligence
Clients may allege that incorrect advice, software defects, implementation failures or professional errors have caused them financial loss. Even if a claim is ultimately unsuccessful, legal defence costs alone can be substantial.
Cyber Attacks and Data Breaches
FinTech businesses routinely process highly sensitive financial and personal information, making them attractive targets for cyber criminals. Ransomware, phishing attacks, business email compromise, malicious insiders and data breaches can all result in significant financial losses and regulatory scrutiny.
Technology and System Failures
Software bugs, failed updates, cloud outages, API failures and infrastructure issues can interrupt critical financial services, resulting in contractual disputes, lost revenue and dissatisfied customers.
Regulatory Compliance
Many FinTech firms operate under the supervision of the Financial Conduct Authority (FCA) and must comply with legislation including GDPR, anti-money laundering (AML) requirements, payment regulations and operational resilience obligations. Failure to meet these requirements can lead to investigations, fines and reputational damage.
Fraud and Financial Crime
The movement of money and sensitive financial information makes FinTech businesses particularly vulnerable to social engineering, payment fraud, funds transfer fraud, employee dishonesty and other financial crime.
Examples of FinTech Insurance Risks
The following illustrative scenarios show how claims and losses can arise for FinTech businesses.
Software implementation failure
A payment platform alleges that an integration error caused transactions to fail, resulting in lost revenue, customer complaints and compensation costs.
Funds-transfer fraud
An employee acts on a fraudulent payment instruction and transfers company or client funds to a criminal account.
Data breach
A security vulnerability exposes customers’ personal and financial information, leading to incident-response costs, regulatory scrutiny and third-party claims.
These examples are illustrative only. Whether an insurance policy would respond depends on its terms, conditions, exclusions and the circumstances of the loss.
Insurance Solutions for FinTech Companies
A comprehensive insurance programme should protect against both professional liabilities and modern cyber threats. Although the policies can sometimes overlap, they are designed to respond to different risks.
| Type of insurance | Examples of risks it may cover |
|---|---|
| Professional Indemnity | Negligent advice, errors, omissions, software or implementation failures and related legal defence costs. |
| Cyber Insurance | Data breaches, cyberattacks, incident response, system restoration and cyber-related business interruption. |
| Crime Insurance | Employee dishonesty, funds-transfer fraud, computer fraud and social-engineering losses. |
Professional indemnity, cyber and crime policies can overlap, but they are not interchangeable. Cover depends on the policy wording, exclusions, limits and circumstances of the loss.
Professional Indemnity Insurance
Professional Indemnity Insurance protects your business against claims arising from professional negligence, errors, omissions, breach of professional duty and other liabilities connected with the financial or technology services you provide.
Depending on the policy wording, cover may include:
- Legal defence costs.
- Compensation awards.
- Civil liability claims.
- Breach of confidentiality.
- Intellectual property disputes.
- Loss of documents or electronic data.
- Regulatory investigations where available.
Cyber Insurance
Cyber Insurance helps businesses recover quickly following a cyber incident by covering both the direct costs of responding to an attack and claims brought by third parties. Cover may include:
- Data breach response.
- Incident response specialists.
- Digital forensic investigations.
- Legal advice.
- Customer notification costs.
- Credit monitoring services.
- Cyber extortion and ransomware.
- Business interruption following a cyber attack.
- System restoration and data recovery.
- Public relations and reputation management.
- Third-party liability arising from data breaches or network security failures.
Crime Insurance
Crime Insurance can provide valuable protection against financial losses arising from fraud, theft, employee dishonesty, funds transfer fraud, computer fraud and social engineering attacks.
Insurance Designed Around Your Business
No two FinTech businesses are the same. An FCA-authorised payment institution has very different insurance requirements from a cryptocurrency software developer, RegTech provider or embedded finance platform.
Our advisers take the time to understand your business model, regulatory obligations, technology stack and contractual responsibilities before recommending an insurance programme tailored to your specific risks.
What Insurers Assess When Quoting for a FinTech Business
When arranging insurance for a FinTech company, insurers will usually want to understand:
- The services and technology the business provides.
- Its FCA status and regulatory permissions.
- Annual revenue and the value of transactions processed.
- Whether it holds, controls or transfers client money.
- The types of customers it serves and where they are based.
- Its reliance on cloud providers and outsourced technology.
- The volume and sensitivity of the data it handles.
- Its cybersecurity, business-continuity and incident-response controls.
- Its contractual liabilities and service-level commitments.
- Previous claims, losses and circumstances.
- How artificial intelligence is used and reviewed within the business.
Common FinTech Insurance Mistakes
Common mistakes include:
- Assuming professional indemnity insurance automatically provides comprehensive cyber cover.
- Failing to disclose changes to services, technology or regulatory permissions.
- Choosing a limit of indemnity based primarily on price.
- Overlooking contractual liabilities and service-level agreements.
- Failing to coordinate professional indemnity, cyber and crime policies.
- Not reviewing cover after launching a product, entering a market or changing the business model.
Engage with a broker who has the knowledge you need (it saves you time)
Our specialist knowledge of both Professional Indemnity and Cyber Insurance enables us to arrange comprehensive protection for a wide range of FinTech businesses, including:
- Payment service providers.
- Digital payment platforms.
- Open Banking providers.
- Embedded finance businesses.
- WealthTech companies.
- InsurTech businesses.
- Lending platforms.
- RegTech providers.
- Financial software developers.
- AI-powered financial technology businesses.
- SaaS providers serving the financial services sector.
As your business grows, enters new markets or launches new products, we'll work with you to ensure your insurance continues to evolve alongside your organisation.
Whether you're an early-stage FinTech start-up seeking investment or an established financial technology company with complex regulatory obligations, our experienced team can help arrange Professional Indemnity and Cyber Insurance that reflects the unique risks of your business.
Why PIIB?
- Competitive premiums from leading insurers.
- Fast quotations and responsive service.
- Smooth transition from your existing insurer.
- Cover available for both established businesses and start-ups.
- No pushy salespeople—just experienced insurance specialists.
- Insurance solutions tailored to your individual business and regulatory requirements.
This note is intended for informal guidance purposes only. Whilst all care was taken to ensure the accuracy of the guidance note at the time of writing, insurance markets constantly change and it is not to be regarded as a substitute for specific insurance or legal advice. For insurance advice please contact a broker and for legal advice contact a solicitor. This guidance note shall not be reproduced in any form without our prior permission. © Professional Indemnity Insurance Brokers Ltd