In London, CFC has established itself as a specialist insurer, providing insurance solutions for emerging technologies.
With a focus on the fintech sector, CFC has positioned itself as a leader in understanding and mitigating the risks faced by financial technology companies.
Steve Bowers serves as Fintech Development Manager at CFC. His role encompasses both client engagement and technical underwriting.
“I'm responsible for all of our global broker engagements from a fintech perspective,” Steve states. “But that's not all – I'm also a full-time underwriter, diving into fintech risks daily, providing and issuing policies.”
This two-pronged role enables Steve to effectively bridge the gap between client needs and technical underwriting, ensuring CFC's products remain relevant and competitive in a rapidly changing landscape.
Since Steve joined CFC in 2017, the company has expanded significantly. The team has grown from 200 to more than 1,000 employees, reflecting the increased demand for specialised insurance products in the fintech sector.
“We're not just selling policies,” Steve notes. “We're providing market-leading solutions, backed by great service, competitive pricing and a claims service that goes above and beyond. It's the whole package that sets us apart.”
Of course, serving the fintech insurance doesn’t come without its challenges. A primary concern is the evolving regulatory landscape, which requires continuous monitoring and adaptation.
Steve describes this challenge: “It's a bit like trying to hit a moving target. We might craft a policy that's perfect for today’s needs, but if there’s a regulatory change tomorrow, we’re back to the drawing board, making sure we're providing cover that's not just right, but compliant.”
This challenge is magnified by CFC’s international operations. With fintech clients operating across multiple jurisdictions, each with distinct regulatory requirements, maintaining compliance requires significant attention.
The evolution of CFC
CFC's development in the insurance industry demonstrates its ability to straddle these challenges. The company initially focused on cyber coverage at the start of the millennium, an early specialisation that has provided CFC with substantial data and expertise in cyber risks.
“Cyber coverage is our calling card,” Steve states. “But we're not ones to rest on our laurels. We've branched out into other emerging areas – technology, intellectual property, digital healthcare and, of course, fintech. It's all about staying ahead of the curve.”
CFC’s objective remains staying at the peak of innovation. Through developing customised solutions for specific client needs, it has accumulated approximately 150,000 business policyholders globally. These clients represent various sectors, each presenting distinct risk profiles.
The firm’s services extend beyond policy provision. CFC maintains an in-house cyber security and incident response team, providing 24-hour support to policyholders. Its preventative approach includes vulnerability scanning and dark web monitoring to identify potential issues before they escalate into claims.
Steve expands on this service approach: “We're not just sitting back and waiting for claims to come in. We're out there, actively looking for vulnerabilities, scouring the dark web – basically doing everything we can to spot potential issues before they blow up into full-blown claims. It’s all about prevention.”
Adapting to the AI revolution in fintech
In today’s financial services sector, it’s clear that artificial intelligence (AI) is changing the game, requiring CFC to develop new approaches to risk assessment and coverage.
“AI isn't just a tech thing anymore,” notes Steve. “It's seeping into every industry you can think of.”
In fintech, Bowers identifies two principal areas of AI implementation: automated financial advice and automated investments and trading. CFC is developing strategies to address these emerging risks.
The company’s approach to underwriting AI-related risks involves detailed assessment of each case.
As Steve explains: “We can't just apply a one-size-fits-all approach here. We need to really dig in and understand what each AI risk entails. Is there human oversight? Who's checking the algorithms? What kind of due diligence is happening to ensure accuracy?”
While CFC's fintech policy form does not currently include a dedicated AI section, its policies accommodate AI-related liabilities.
“If a client is legally liable for AI-related issues, our policies are set up to respond,” Steve confirms. “Of course, it's up to our underwriters to determine where we're comfortable providing that risk and cover, and where we might need to tread more carefully.”
Balancing Innovation and Risk in Fintech Insurance
Of course, CFC's approach to fintech insurance combines monitoring current trends with comprehensive risk management; its underwriting methodology considers multiple variables, similar to traditional insurance products.
“It's all about finding that sweet spot,” Steve explains. “If we can get comfortable with the right factors, that opens the door to more comprehensive coverage and more competitive premiums. But flip that on its head – if we're looking at higher risk factors, we've got to adjust our underwriting accordingly.”
This methodology enables CFC to develop appropriate solutions for each fintech client while maintaining risk management standards.
Steve adds: “Think about it this way. If you’re living in a high-crime area, parking your car on the street, and you've just passed your driving test – all those factors are going to bump up your car insurance premium. The business world isn't all that different.”
Adapting to the changing pace of fintech growth
One variation in the B2B space CFC must consider, though, is the rapidly changing growth rate of the fintech industry, which – following a post-pandemic boom – has seen its acceleration moderated.
This necessitates adjustments to insurance coverage approaches and means short time frames for coverage represent a sensible option.
Steve notes that while long-term projections are relevant, CFC’s underwriting focuses on shorter timeframes.
“When we're underwriting a policy, we're really looking at two timeframes,” he explains. “What's happened in the previous 12 months, and what's likely to happen in the next 12 months. That’s our window.”
This approach allows for appropriate adjustments to coverage and pricing as companies evolve. “When things are ticking along steadily, with slower or even stagnant growth, it's easier for us to make a case for keeping everything as is.
“Of course, if we’re looking at rapid growth, that's when we need to take a step back and reassess our coverage and pricing more thoroughly,” notes Steve.
The Future of Open Banking and Its Insurance Implications
Of all the developments in the fintech arena CFC must keep tabs on, open banking is perhaps the most significant, which Bowers identifies as shifting consumer expectations for financial services.
“Consumer expectations are changing,” he notes. “There’s this growing demand for immediate access to services, and I don’t see that trend slowing down anytime soon.”
The increased accessibility introduces additional considerations regarding data processing, technology functionality and regulatory compliance.
Steve anticipates improved regulatory oversight as open banking matures. “We're not in uncharted territory anymore,” he says. “Open banking has been around for a while now, and hopefully, that means regulators are better placed to keep pace and really get to grips with what's going on.”
These regulatory developments will influence fintech insurance requirements, necessitating continued adaptation from insurers like CFC.
Cybersecurity remains a critical consideration in fintech. The increasing digitisation of financial services correlates with greater exposure to cyber-attacks and data breaches. CFC's experience in cyber insurance provides relevant expertise.
“Our experience in cyber insurance gives us a unique perspective on the cybersecurity challenges facing fintech companies,” Steve notes.
“We're able to leverage this expertise to provide comprehensive coverage that addresses both the financial and technological risks these companies face. It's not just about protecting against financial loss – it's about safeguarding their entire digital ecosystem.”
CFC 's role in shaping the future of insurance
CFC’s position in the insurance sector reflects its focus on emerging technologies and flexible underwriting approaches, with its capabilities enabling it to anticipate and address industry developments.
Steve emphasises the importance of adaptability in insurance provision. “The thing about fintech is that it's changing so rapidly, all the time.
“We never see one risk that's exactly the same as another. And on any given day, you could be faced with something completely new and groundbreaking."
This environment requires proactive and innovative risk management approaches, and ongoing development of insurance solutions. Such solutions support business operations in an increasingly complex technological environment.
Steve concludes: “At the end of the day, our ultimate goal is to provide protection that enables businesses to operate confidently. We want fintech companies to be able to focus on innovation and growth, knowing that we’ve got their back when it comes to managing risk.”
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