MARKEL

Fast-scaling companies often struggle to maintain robust risk management procedures while expanding their operations and customer bases.

“ That really changed the risk profile of fintech companies,” Nick notes.“ Looking at fintech companies that are very stable to a fintech company that is growing so fast creates a lot of risk exposure, particularly around how the company is scaling its internal risk management procedures.”

Areas including anti-money laundering compliance, know-your-customer checks and IT infrastructure became pressure points for rapidly expanding fintechs. Markel’ s underwriters had to assess whether companies could maintain regulatory compliance while pursuing aggressive growth targets.

Regulatory shifts reshape risk profiles Regulatory changes significantly altered fintech risk profiles during Markel’ s decade-long journey. The introduction of the Second Payment Services Directive( PSD2) in Europe and open banking regulations in the UK created new categories of regulated firms requiring insurance.

“ The most significant for us was probably when PSD2 came in,” Nick reveals.“ Within the European Banking Authority guidelines for PSD2, there were certain insurance requirements that had to be met for these companies to get regulated.”

Markel worked directly with the Financial Conduct Authority in 2017 to ensure its policy met regulatory requirements for Account Information

Between 2018-2021, low interest rates of 0.25 % fuelled massive venture capital investment in fintech

Service Providers and Payment Service Providers emerging from open banking reforms.

“ We met with them and chatted about these insurance requirements and whether it’ s something that the insurance industry could provide,” Nick explains.“ We looked at our own fintech policy and made some changes to make sure it was compliant.”

This regulatory engagement proved crucial for Markel’ s positioning as a fintech insurance specialist. By working with regulators to shape insurance requirements, the company established itself as an industry partner rather than simply a risk transfer mechanism.

Subsequent regulatory developments, including Consumer Duty requirements, the EU’ s Markets in Crypto-Assets Regulation( MiCA) and the Digital Operational Resilience Act, have continued reshaping fintech risk profiles.

“ Regulation has definitely been at the forefront of our minds over the past 10 years,” Nick says.“ We need to make sure that we’ ve always got our finger on the pulse about what’ s changing, because we cover virtually all of the sub-sectors of the fintech industry.” fintechmagazine. com 71