The technology sector continues to grow, particularly post-Brexit as the UK strives to be a leader in technological advancement. Recent reports have suggested that the UK’s digital economy is growing faster than ever.
In fact the UK is leading Europe, attracting £28bn in technology investment since 2011, compared with £11bn in France and £9.3bn in Germany. Also, in 2016, c70% of £9.2b investment went to regional business outside of London (1). Cities such as Reading and Bristol/Bath have emerged as areas with a ‘dense digital concentration’. Indeed, other provincial towns and areas are hitting the news too, such as Cornwall and Stockport, for attracting top talent and firms looking to relocate. This is creating a great opportunity for the regional insurance market to provide a quality service for these firms.
So, what does that mean for insurers?
Well, with so much of the business world now reliant on their technology and systems, the IT companies providing them have become the backbone to the UK economy. Much like any professional service firm, IT companies owe a duty of care to third parties and are open to claims alleging negligence or for other legal liabilities, should anything go wrong.
It is estimated most of PI claims in the IT sector are connected to an alleged contract breach.
We also know how important contracts are in securing business in the IT sector and these have evolved over the years. Cover for the unintentional breach of a written contract is becoming vital, especially when it’s estimated most of PI claims in the IT sector are connected to an alleged contract breach. Liquidated Damages, that have been agreed between the two parties, are also now common in IT contracts so it’s a positive feature to have these recognised under a PI policy (provided they are a fair, reasonable and genuine estimate of damages).
Furthermore, clients of organisations are now increasingly requiring their IT firms to carry PI insurance, so evidencing a quality product is important and may even be a marketing advantage when IT firms are competing for business.
It’s easy to see why this will be a huge growth area going forward and, much like MPRs approach to underwriting, a decent backbone needs to be both solid and flexible.
(1) Source – Daily Telegraph March 2017