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2019 Innovation Awards: FINTECH Protect

Business Insurance 2019 Innovation Awards

Marsh USA Inc.

Marsh USA Inc.’s FINTECH Protect product reflects the adage that “necessity is the mother of all invention,” said Thomas Orrico, Marsh USA’s New York-based managing director and FINPRO financial institutions practice leader.

This product, which is offered by Marsh with American International Group Inc. unit Validus, was needed by startup fintech companies, which provide financial services by making use of technology, according to Mr. Orrico.

“Typically, when fintech companies went into market, just by the nature of their offerings they have financial institution exposure and they have technology exposure,” and the risk had to be presented to both financial institution and technology underwriters, said Mr. Orrico.

“The process was very inefficient and very cumbersome,” so a better solution was needed for Marsh’s fintech clients, Mr. Orrico said.

There were three goals in developing the product, whose first policy was bound in 2018’s fourth quarter, he said.

The first goal was to fill in any gaps in coverage. “There were always gaps in coverage we could never solve for,” he said.

The second was to speed up the process from the previous approach, where clients had to meet with both financial institution and technology underwriters, said Mr. Orrico.

The third “was to increase the insurance takeup rate,” Mr. Orrico said. Fintech startups operate under tight budgets, he said.

“We wanted to make this product appeal to them” in a way that was cost-efficient “yet addresses all of their coverage needs.” The resulting FINTECH Protect product offers directors and officers, errors and omissions, fiduciary liability, employment practices liability, cyber and crime coverages, and offers blended primary limits of up to $10 million.

Pointing to Validus, Mr. Orrico said, “This is an exclusive policy that we mutually worked on together, so it’s not available to other carriers” for the $10 million layer.

“We could get additional capacity in the marketplace” in the open market of up to $100 million if desired, he added. Premiums vary depending on the limits, he said.

The product is available to privately held fintech firms, including those backed by venture capital and private equity funds.

It covers fintech startups from their early stages “all the way up” to their initial public offering, said Mr. Orrico. “I would say the average (client) is about 5 to 6 years old,” he said.

Enhanced endorsements are being planned, Mr. Orrico said.


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