A new product has been developed specifically to protect investors on equity crowdfunding platforms against issuer fraud.
Insurance giant American International Group, Inc. on Tuesday announced the launch of the product for the fast-growing sector.
The product, which is currently available in Canada and the United Kingdom, enables crowdfunding platforms to purchase insurance against fraud by issuers and their employees, directors and officers.
AIG claims that it is the first new insurance product developed specifically to protect investors on equity crowdfunding platforms against issuer fraud.
“As a sector still in its infancy, equity crowdfunding platforms are only as strong as the confidence they instill in their investors,” says Lex Baugh, president of liability and financial lines at AIG, in a statement. “This new product will help provide that confidence and help to support this asset class as it matures.”
As other countries finalize their regulatory regimes to allow equity crowdfunding, the policy can be customized to suit the local needs of crowdfunding platforms in other countries, AIG says.
Last week, new crowdfunding rules took effect in the United States.
Several provinces have also adopted new crowdfunding exemptions over the past year.
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