In order to assuage the concerns of investors, this coverage will help to protect them from being ripped off by startups.
The American International Group has now unveiled a new form of coverage and this AIG crowdfunding insurance is meant to provide a unique protection not to startups that are attempting to raise money, but actually to the investors who want to take a chance on them but who are afraid of being scammed or losing their investments.
The New York based insurance company is now gearing up for the launch of its “Crowdfunding Fidelity”.
The announcement was made earlier this week, at which time it was explained that the AIG crowdfunding insurance is being designed to protect investors who would otherwise hold off their investment due to the perceived risk. Still, the insurer did point out that the number of instances of fraud in this type of situation have not been high in numbers, but the product is meant to help to remove the doubt investors are feeling. That way, there can be greater faith in the trustworthiness of the startups requesting the funds.
The AIG crowdfunding insurance is meant to make it easier for investors to take a chance on a startup.
According to the AIG president of liability and financial lines, Lex Baugh, who made a statement in a news release, “As a sector still in its infancy, equity crowdfunding platforms are only as strong as the confidence they instill in their investors.”
That said, it should be pointed out that not just any crowdfunding project qualifies for protection through this new insurance policy. It is meant to offer protection specifically in the case of equity crowdfunding, in which investors actually obtain a stake in the company they have helped to fund.
Earlier in May, a new regulation went into effect in the United States which made it possible for ordinary investors – not just the super-rich and accredited investors – could participate in this type of offering.
Moreover, the AIG crowdfunding insurance will be available only through certain approved portals that the insurer has deemed to have satisfactory business background check processes.