Technology Insurance (tech)

Professional Liability insurance is a form of insurance designed to protect professionals and professional organizations from financial loss from their negligence. Professional liability insurance is made up of four major segments:  professional liability (also called "errors and omissions", "E&O", or "malpractice"), directors & officers (D&O), employment practices liability (EPL) insurance and the newest segment, Technology (Tech) insurance. 

Technology has become ingrained in our personal and professional lives, and the associated exposures are complicated.  Exposures can also be severe, impacting both professional developers and users in a variety of ways.  Specialty insurers have responded to these exposures with different approaches and policy forms, and these forms have evolved to incorporate both first and third party (liability) coverages.  To further complicate the market, there is a long list of names that are used to describe these coverages, including cyber liability, data breach, privacy, hacker coverage, network liability and technology E&O. 

At Tennant Risk Services, we begin by distinguishing between technology professionals and technology users.  While the needs and forms can be quite different, the technology exposures, Cyber Risks, are similar. 

Technology Professionals E&O

Technology professionals are organizations that bring technology to us.  They develop technology and related services for individuals and organizations, and effectively bring this technology to our everyday lives.  These organizations need professional liability and other specialty coverages to protect themselves from technology exposures.  Professional services include:

Software Designer/Developer
Website Development
Network/System Administration
Software as a Service/Web Services
Helpdesk/Call Centers
Computer Security
Systems/IT Consultants
Process Control & Robotics

Specialty insurers have created a range of technology E&O products for these professional organizations, and many have added additional cyber risk coverages as well.

Users – Cyber Risk Insurance

As the use of new technology and the internet has exploded, so have new technology risks and exposures.  Technology users are the wide range of individuals and organizations that depend on technology and technology vendors, and need coverage to protect them from the corresponding exposures.  Traditional liability and property products have not kept pace, so specialty insurers have responded with specialized insurance products, which we call Cyber Risk policies.  These Cyber Risk policies vary with the type of user and the exposures presented, but typically are a package of coverages incorporating both first party and third party coverage parts. 

The Cyber Risk segment is a new and rapidly changing market segment.  The danger for insurance agents and brokers is that insureds may think that their technology exposures are covered within their CGL.  The coverage needs go much further than the CGL, and typically include both first and third party coverages arising out of the provision of goods and services using technology.  Coverage can include professional liability, virus protection, identity theft protections, breach mitigation, copyright infringement, libel/slander, regulatory defense and intellectual property protection. 

To add to the complexity, different types of insureds have different exposures and coverage needs.  For example, traditional businesses operating over the internet (e-businesses), organizations with confidential data, and providers of online content all have varying Cyber Risk needs.

Data Breach - One sub-segment that is getting significant attention in the media and from insureds is data breach.  Data breach products are focused on protecting an insured from the exposures of a breach of confidential information, whether electronic or paper-based.  Coverage is not expensive for most type of organizations, but the risks can be significant.  Target classes include:

• Retail Stores
• Medical Offices & Facilities
• Auto Dealers
• Benefit Administrators, TPAs
• Insurance Professionals
• Financial Institutions

Claim Scenarios

Damages from technology mishaps are all around us in the news.  Some example claim scenarios include:

• Privacy – An employee of a medical office improperly accesses and releases private medical records, resulting in a regulatory notification requirement and a suit from one of the impacted parties.
• Virus – A virus is introduced, and shuts down an order processing systems causing damages to the insured company and its customers, resulting in both first and third party claims.
• Professional – The work product for a customer does not meet expectations, and results in a claim by the customer.
• Data loss – Data residing with a vendor is lost, and the cost to replace the data is significant.

Tennant Risk Services is a wholesale broker providing professional liability for a wide variety of professional organizations.  We offer a broad portfolio of Technology Professional and Cyber Risk products, in many cases customized to meet the specific needs of an individual or group of technology professionals or users.  We will provide you with the experience, expertise, and market access that you need and expect to meet your clients’ needs.