FinTech errors and omissions (E&O) risk: What do the numbers say?

In the first two parts of this series, we broke down how cyber and crime drive FinTech insurance claims. Now we turn to errors & omissions (E&O) / professional liability (PL) - an equally common exposure, but one that’s often misunderstood and frequently improperly insured. Many FinTech firms assume their tech-driven models shield them from the liability risks traditional financial institutions face. E&O / PL is the second most common source of FinTech insurance claims - just behind cyber - and one of the hardest to insure correctly. It spans both technology and financial services, often falls between policies, and routinely exposes structural flaws in insurance programs.

What the data says

From 2007 to 2024, Willis, a WTW business’s proprietary claims data reveals how complex - and costly - E&O / PL exposures can be for FinTechs:

• Losses vary widely
  FinTech E&O / PL claims span an enormous range. While many settle for less than $250,000, others surge into seven-or even eight-figure territory—especially when a platform outage, customer losses, or regulatory scrutiny drives up defense costs and restitution.

• Claims frequently involve multiple allegations 
  Some E&O / PL claims include overlapping issues - tech failure, service error, regulatory missteps - all stemming from a single incident.  
• Coverage disputes are common 
  Insurers often disagree on whether a claim falls under Tech E&O / PL, Financial E&O / PL, or another line - delaying response or leaving the client potentially caught between policies. 
• Regulatory actions are a recurring theme 
  Claims frequently begin with regulatory inquiries rather than lawsuits, and many policies either exclude or narrowly limit regulatory defense, leaving firms exposed. 
• Minor errors can escalate quickly 
  A small issue - like a system bug, delayed data feed, or balance error - can cascade into major losses when customers rely on the platform to transact or manage funds. 

When insurance structure falls short: Real-world consequences 

The problem isn’t just the complexity of the risk - it’s the structure of the coverage. Too often, FinTechs discover serious issues not when they’re buying insurance, but when they’re relying on it. Misaligned policies, vague wording, and uncoordinated terms can lead to breakdowns when claims occur:

• False confidence in meeting contractual obligations
  Third party agreements often require FinTechs to carry “appropriate E&O / PL insurance,” but typically don’t define what species of E&O / PL. Relying on Tech E&O / PL alone - when your products or services are more than just technology offerings - can leave you non-compliant and create friction with important partners at the least opportune time.
• Confused claim reporting
  FinTech claims can trigger multiple policies, leaving firms unsure where their coverage is or how much they might have available to defend a claim. This also creates administrative burdens and potential coverage problems if a potentially applicable policy isn’t tagged at the outset.
• Over- or under-insurance
  Programs that aren’t built around how your services work often misallocate coverage. We frequently see firms paying for overlapping E&O / PL and cyber protections for the same risk - while leaving other exposures, like regulatory defense or financial services activity, completely uninsured. The result: higher premiums with less meaningful protection.
• Confused coverage
  It doesn’t stand to reason in the insurance world that a claim will be covered by one policy simply because it’s excluded by another. Policies aren’t designed to “catch” what others leave out - they respond based on specific insuring agreements, definitions, and exclusions. Without clear coordination, a single event can fall between policies, leaving firms stuck between insurers with no clear path to recovery.
• Assumed - but missing - regulatory protection
  Many FinTechs assume E&O / PL policies automatically cover regulatory investigations. Coverage varies widely - some forms exclude informal inquiries, limit defense to certain proceedings, or cap spend under sublimits. Firms often find out too late that what they thought was covered isn’t - usually when the regulator has already reached out.
• PR fallout without insurance to back it
  E&O / PL events involving customer harm can become reputational crises. Without coverage to help fund restitution or remediation, firms face financial and brand damage simultaneously.

Addressing the Problem: What FinTechs can do

Unfortunately, there’s no single blueprint for getting E&O / PL coverage right. FinTech business models vary widely, and insurance programs need to reflect that complexity. But across the board, we’ve seen the same issues surface in claims - misaligned policies, missed coverage, or confusion over how the structure is supposed to respond – the answer isn’t always to buy more insurance. It means building a program that fits how your firm operates. For example, here are a few key considerations:

1. Review blended forms and where necessary, coordinate and align terms if utilizing multiple policies for a streamlined approach
2. Look beyond benchmarking – use predictive analytics to accurately reflect how your business is evolving
3. Take advantage of current market conditions and enhance coverage where possible that aligns with your business

Final thoughts

Being tech-driven doesn’t make you risk-free. E&O / PL remains one of the most frequent - and costly - sources of claims for FinTechs, and it’s rarely managed well by off-the-shelf solutions. Whether you're coordinating multiple policies, evaluating blended forms, or rethinking your approach entirely, the key is understanding how your exposures show up in claims - and structuring coverage to respond.

Work with a partner who understands both your business and the insurance market. We have built FinTech Plus which addresses your coverage needs with a unified wording, and a structure designed around how FinTech firms operate. Learn more below.

Authors

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Anthony Rapa

FinTech Subvertical Leader, Financial Institutions & Professional Services – North America

email Email phone +1 212 915 8506

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Trenton McNee

FinTech and Digital Assets Industry Leader, FINEX Financial Institutions

email Email phone +44 7799 477940

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