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First EU insurance policy in line with Article 11 ECSPR is available now

by EUROCROWD on 21.12.2022

EUROCROWD is happy to announce an exclusive Crowdfunding Service Provider (CSP) insurance policy, in line with Article 11 of the Regulation (EU) 2020/1503 of 7 October 2020 on European crowdfunding service providers (ECSPR).

Eurocrowd has worked closely with its members to support the development of this solution together with UK insurance broker Protean Risk. ECSPR will apply in all EU Member States with effect from 10 November 2023 and as a result, all in-scope crowdfunding services providers offering lending or investment-based crowdfunding services will be required to hold insurance as stipulated in Article 11 of the regulations unless they can fulfill adequate capital requirements. Failing adequate capital requirements under Art. 11. 2(a), dedicated insurance will be necessary according to Art. 11. 2(b) for both established CSP operating prior to the date the regulations come into force, ensuring they will hold a compliant insurance policy by November 2023, and start-ups going through their regulatory application process for the first time.

Under Art. 11 ECSPR certain risk exposure need to be covered by prudential safeguards. These include 1) loss of documents, 2) misrepresentations or misleading statements made, 3) failure to establish, implement and maintain appropriate procedures to prevent conflicts of interest, 4) losses arising from business disruption, system failures, or process management, and 5) acts, errors or omissions resulting in a breach of legal and regulatory obligations, duty of skill and care towards clients and obligations of confidentiality.

Following months-long development and input from EUROCROWD members, our partners at Protean Risk are now able to offer ECSPR-licensed crowdfunding service providers an insurance solution that is compliant with the requirements of the ECSPR, through a policy covering Professional Indemnity, Directors’ and Officers’ Liability and Cyber related risks.

EUROCROWD is excited to have been able to help lead the way for Crowdfunding Service Providers also with regard to prudential safeguards and will continue to support the professional implementation of ECSPR. Interested members and other crowdfunding service providers may contact EUROCROWD for details

EUROCROWD is happy to be able to have agreed a 5% reduction on the insurance premium to its members*

Protean Risk launched in 2008 as a specialist financial services insurance broker, Protean Risk pioneered the first dedicated Fintech and Payment Services broker team. The firm serves the UK Crowdfunding and Peer to Peer sectors and brought to market the first insurance solution for firms operating under the Open Banking regulations in 2018 and more recently, providing a unique and compliant insurance policy and alternate means of safeguarding client funds under the Payment Services Regulations and Electronic Money Directive.