5 Insurance considerations for firms operating under PSD2

Elmore takes a comprehensive approach to risk identification and risk management, for the benefit of insurance offerings that protect and strengthen any business operating under PSD2. We summarise areas where we support PSD firms:

1. PSD2 risk mapping and identification

We identify and map key risks for PSD2 services and technology offerings along with other business areas, and we outline potential loss scenarios so that maximum probable losses can be calculated.
Following these discussions, firms will have a clear idea of the risks facing their businesses and are better able to judge if they should mitigate, accept or transfer these risks.

2. Silent Review – insurance due diligence

A Silent Review of insurance policies, including suitability of PSD2 Professional Indemnity insurance (PII). This is particularly useful after a change in business model, industry-specific or global regulatory action, or for an impending M&A or fund raise.

During the Silent Review, Elmore will:
• Help calculate the specific requirements of the PSD2 Professional Indemnity Insurance (PII)
• Analyse business activities in light of the coverage purchased
• Review all relevant insurance policy terms and conditions
• Assess the adequacy of the sum insured, deductibles and premiums
• Identify gaps or overlaps in coverage between policies
• Provide peer review analysis

A report with key recommendations and a risk rating is submitted at the end of the review. A higher level of detail is provided if enhanced due diligence is required.

3. Risk transfer/insurance

Elmore provides advice on, and places, insurance into Lloyd’s, the world’s leading insurance and reinsurance market, along with a range of competitive company market and MGA insurers. We look for the most competitive pricing and suitable coverage for our clients.
Through our market presence, we secure tailored solutions for firms operating under PSD2, creating long-term partnerships based on a clear understanding of our clients’ evolving needs in relation to PSD2.

4. Partner with insurers – embedded insurance

There are many ways insurance can help firms operating under PSD2:
• Embedded insurance for your customers – insurance can be an innovative way for a firm to protect its customers from a variety of risk events, including but not limited to:
o Personal or micro SME cyber insurance
o Gadget insurance
o Travel insurance
• Service warranty for your customers – insurers can provide protection for a firm offering a service warranty to its customers without the firm needing to issue any insurance policy to customers.

5. PSD2 M&A and Fund Raises

Firms operating in the PSD2 environment are increasingly active in mergers, acquisitions and fund raises. Elmore can support M&A or fund raise insurance due diligence. M&A insurance allows the buy-side to offer more appealing terms, while the sell-side can reduce the escrow period and have a clean exit. In short, M&A insurance is a deal enabler.

About Elmore Insurance Brokers

Elmore advises its clients to actively manage risk to optimise insurance. Insurance is a partnership between businesses and insurers, and this partnership depends on a very close working relationship and careful analysis of risks. Elmore provides this focus and expertise, helping businesses to understand and implement risk management best practice.

Written by Simon Gilbert, Founder and Managing Director, Elmore Insurance Brokers Limited.

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