Crowdfunding (see our prior posts here & here) is continuing to gain momentum, and professional liability insurance is available for companies involved. Companies facilitating crowdfunding, such as platforms, broker/dealers and consultants, along with crowdfunded companies, need E&O, D&O, EPL, Cyber Risk and other insurance coverages.
The SEC has been slow to implement the full intent of the JOBS Act of 2012, but interest is high. A recent article, Players Await SEC Rules, summarizes the interest:
Until the SEC issues final Title III regulations, the full promise of the JOBS Act and crowdfunding for small businesses and investors remains unfulfilled. Insurers, most states, investors, operators of crowdfunding portals, lawmakers and small businesses are all waiting on the final regulations.
However, this is significant activity now. For example, Merriman Capital has developed and implemented the Digital Capital Network for providers, accredited investors and private companies. And there are other platforms and services currently serving the accredited investor segment, most ready to shift to the non- accredited segment as soon as the SEC gives the green light.
Insurance is available now. Key coverages required include Directors & Officers (D&O), Errors & Omissions (E&O) and Cyber Risk (Data Breach, Network Security) insurance. Specialty underwriters are currently writing these lines for crowdfunding facilitators and for crowdfunded companies. A market summary was provided to the SEC (see here), but some of these conclusions are out of date – we are placing coverage for companies involved in crowdfunding now.
Tennant Risk Services is a specialty wholesale broker and underwriting manager, and delivers expertise, markets and exemplary services to our retail insurance agent clients in the placement of professional liability insurance (E&O, D&O, EPL, Cyber). We excel at hard to place accounts, including special situations such as crowdfunding exposures.