So now crowdfunding apparently can be used to fund a political campaign. But wait, funding a political campaign is one of the early uses of crowdfunding. Long before the JOBS Act, like-minded people came together with their dollars and supported a cause that was important.
Interesting article on NPR talking about a new entrant into the Presidential Race.
I frequently talk with underwriters and ask, "is this crowdfunding?" as I talk about the four quadrants of crowdfunding. Is crowdfunding a political campaign actually "crowdfunding" and is there any liability associated with this (really, not much).
While many small companies can obtain Cyber insurance coverage with minimal underwriting, larger companies are typically completing a long application and a significant underwriting process. The actual act of completing the application can cause companies to think about policies and procedures that they may have otherwise overlooked. For example the ACE Cyber application asks about privacy policies, encryption procedures, IT security budgets and a disaster recovery and business continuity plan. Going into the insurance purchasing process, many companies may have spent little time considering the risk in these areas. One of my favorite questions has to do with the proper addition, deletion and modification of user accounts. It never ceases to amaze me when a company fails to terminate access upon the departure of an employee or provides administrative rights or access that exceeds the employee's 'need to know'. So much of data security starts with educated users and limitations on access by the IT team.
This article from the Washington Post explains that the "mere process of applying for cyber insurance can help businesses identify tools and best practices (that companies) may lack. Even beyond the realization, many carriers offer services after the policy is sold that can help mitigate the risk of an attack and improve procedures. For example, AIG has partnered with Risk Analytics out of Kansas City to provide basic loss prevention tools to AIG Cyber customers at no charge. Other carriers offer services ranging from a 1-800 number hotline to hours of independent consultants. When considering the right carrier for your Cyber Liability exposure, consider policy language, ability to respond to a breach and also the loss prevention and mitigation tools available. If these factors work well together, you may be able to avoid some breaches altogether or at least significantly mitigate the exposure.
Ready to explore Cyber Liability protection? Take a look at this application and contact us to discuss further. We can help you navigate the variety of options available and help you find the right fit for your company. We can also help you mitigate your risk and reduce your exposures. Don't you want to be more secure?
Many companies operating on the FinTech spectrum have corporate counsel on staff. Did you know that the legal work of these people is not covered under your General Liability or other insurance? It's not even covered under the D&O (except in rare cases).
The flaw in the Directors and Officers policy is that there is not normally coverage for Professional Services. While the definition of Insured can be amended to include the General Counsel, the definition of Wrongful Act and / or any exclusion for Professional Services needs to be amended as well. Most carriers don't make the change to the Professional Services definition/exclusion. Most polices only add the General Counsel to the definition of Individual Insured. This only solves part of the problem.
While it is true that the company has an obligation to indemnify the individual corporate counsel, the indemnification can fail (either for a public policy reason or because there is no money) and insurance kicks in on a first dollar basis on these situations. When indemnification does apply and is provided, then the policy reimburses the company for satisfying the indemnification obligation. Think of this coverage first as indemnification reimbursement and second as a backstop to indemnification itself.
Employed Lawyers Professional Liability coverage (sometimes called Corporate Counsel Insurance) is typically rated on the number of attorneys and the type of legal work being performed. Polices can start as low as about $2,500 for a $1,000,000 limit and go up from there (sometimes way up). The underwriting process typically includes a fairly innocuous application and a review of the attorney's resume/background/qualifications. There are about ten markets that write this coverage well for private companies and a few more for the publicly traded firms. ACE and AIG are two of our favorites.
Need an application? Click here or email us. Our team will quickly get with you to discuss your exposures and next steps.
Technology, infrastructure, and money seem to gravitate toward efficient ways to function. It is only a natural evolution that Securities Laws will evolve and the exchange of securities will become more efficient. We saw that multiple times in the past 30 years as the stock exchange moved away from noting stock prices in 1/6 increments and went to decimals. We have seen a massive change from the intense floor of the NYSE in the 70's and in particular the 80's as that has led to computer based trading and a faster, easier process. (although all methods can be in danger of manipulation). It is only logical that the trading of private company stock should move out of the country club and into a more efficient method of trade. Hence, the evolution of equity crowdfunding. The opening of general solicitation from Title II has allowed for the evolution of technology to facilitate a more efficient market. And isn't that what we all want? A public forum with which to exchange private stock is coming. And when it does the line between who is a public company and who is a private company will blur further.
What is the future of crowdfunding, take a look at this perspective from FundAmerica, a technology and services provider to the industry.
Rapid change and uncertainty create a greater need for risk management and risk transfer solutions. The insurance marketplace will rise up to meet these exposures in time. For now, Emerging Risks has our finger on the pulse of the market and we have some of the most creative solutions available.
There are many areas of insurance that companies consider. Frequently, the first purchase for companies in the FinTech space is Cyber. I prefer to call this product Data Security and Privacy Liability or DSP. DSP or Cyber coverage can include as many as ten different insuring agreements and these can vary widely by carrier. Many companies can include some level of coverage as an endorsement or add-on to the Commercial Package policy or even the private company Directors & Officers Liability package program. Some of these endorsements are solid coverage but most often a stand-alone product is necessary for the broadest coverage.
A good Data Security & Privacy Liability program will include the following coverage features:
- Network Security & Privacy Liability - this addresses liability exposures from a privacy breach or network hack
- Extra Expense Cover for Data Breach - this covers notification expenses, forensic costs, public relations, crisis management and more (things like credit monitoring and a call center are frequently covered).
- Media Liability - addresses claims of infringement, copyright issues, etc. for your website and other electronic media. The best policies cover all of your media related activities (think print advertising, flyers, logo on your letterhead, etc.)
- Regulatory Defense, Fines and Penalties - many policies limit coverage in this area. Some only provide defense and others cap out the limits at $100,000 or less. Full policy limits are available in the marketplace with the right broker representation.
- Business Income Interruption - when your network is down for days while you recover, your company may lose a significant amount of income. The Business Income component will minimize your loss during this time.
- Data Restoration and Digital Asset Protection - this covers the extra expense to recover, rebuild, and replace your data. That can be far more time consuming and expensive than you may realize.
- Cyber Extortion and Cyber Terrorism - kind of like how it sounds.
Some carriers can extend their policy to cover Social Engineering Fraud or Cyber Deception (where your employee is duped into sending money to an unauthorized person. This is happening to companies in small and sometimes in very large amounts).
You want to pay attention to the limits. Many carriers cap out coverage features below the policy limit. For example, they will have a $1M limit but only provide $100k for PCI or $500k for Regulatory Coverage. Know what you need and make sure your policy has not limited you.
Our team has access to the broadest products in the marketplace and we have streamlined the process to make it quick and easy. In fact, the DSP policy is probably going to be the easiest coverage for you to get. Our programs are easy, comprehensive, and competitively priced. E-mail or use the Contact Us link to inquire further. We can generate bindable terms in minutes and the cost is less than you would expect. We need four basic pieces of information, (1) legal name and physical address; (2) website; (3) contact person; (4) revenues for current or most recent calendar year. That's it! Don't believe that it can be this easy, call or e-mail. We will get you a firm quote that you can act on with minimal fuss. (do not e-mail confidential or sensitive information)
As I began my journey into crowdfunding, it was clear early on that the real estate platforms were gaining the strongest foothold first.
I came across several different lists of various platforms and portals. In many ways, the development of the platforms on the real estate front made a lot of sense. There are are multiple companies that have been syndicating real estate investments for years and the implementation of Title II of the JOBS Act just allowed for those companies to take their solicitation of investors online. These platforms, at least right now, seem to operate exclusively in the Accredited Investor arena but that has not stopped their explosive growth. The question is how much deal flow exists and who will ultimately be able to make money at this.
This article from Huffington Post talks about the attraction that these platforms offer to the disillusioned investor community.
I came across this article looking for a crowdfunded insurance product (think old school Lloyds of London but JOBS Act style). However, this article talks about insuring a crowdfunded project. In this sense, having a backstop to a project that fails. I have talked to several people who seem to like the concept of protecting their investment with an insurance tool of some kind. My skepticism remains as a high number of start-up projects will fail to launch and most certainly fail to generate any meaningful returns. It's an interesting concept nonetheless. I would love to see the crowdfunding insurance product to be crowdfunded itself. Wonder if we'd get that past the regulators???
Link to the article: http://www.visionlaunch.com/is-crowdfunding-insurance-the-next-great-idea/
Monica M. Minkel, RPLU, MLIS, cyRM, CPLP has been working exclusively with Directors & Officers Liability, Professional Liability, Cyber Liability and related products for nearly 20 years. She started her interest in finance by loaning money to her mom at age 11 (complete with a loan agreement and competitive interest rate). She is passionate about all things in the financial industry and the way technology is changing the way capital markets function.