Technology and Cyber Risks

Information Technology Professionals

Information technology professionals (IT professionals) are professional organizations providing technology, systems and Internet services. These organizations include a wide range of businesses, including the following types of services:

IT professionals are professionals who perform a specialized technology or Internet related professional service for a fee. Typically this service is based on the provision of expert knowledge. IT professionals hold themselves out as experts in a particular area and as a result can be held liable should they commit an error or omission in rendering their professional services. In addition, they have liability exposures arising from how they provide their services, such as allowing a third party unauthorized access to a client's systems.

In providing expert knowledge, IT professionals can analyze problems or opportunities associated with key business functions, recommend practical solutions and help implement these recommendations. Unlike many consulting organizations, the key aspect of IT professionals' work is the implementation.

Exposure

In the information technology world claims do occur. Many smaller IT professionals may never see any claim, but when a claim occurs it can be significant. In many cases the consequences of an error or omission greatly exceed the value of the work completed. And litigating an IT professional claim can be extremely expensive due to the highly technical nature of most of the subject matter. Click on Claim Examples for some actual claim situations.

The typical IT professional claim involves financial loss by a client due to an error or omission by the consultant. An example is the failure of an EDP consultant to recommend an appropriate system for a client, resulting in a financial loss to the client.

A claim or lawsuit may not always involve a clear error or omission. A client may not be satisfied with the result of the professional's work product and may bring a claim to obtain a different result or avoid paying a fee. These types of claims are often just as difficult and expensive to defend as a clear-cut error, particularly where the subject matter is so complex. Insurance typically pays for the cost of defending this type of claim as if it were a clear-cut error on the part of the insured consultant.

While Internet-related professional exposures arise from services provided to clients by IT professionals such as web site development, they can also arise from damage a professional can cause to a client's systems resources. This latter exposure includes virus transmission, allowance of unauthorized access and loss of data. In addition, professional exposures can extend beyond traditional economic loss to contingent bodily injury or property damage for some professionals.

Some IT professionals also have media exposures that arise from intellectual property, defamation and invasion of privacy claims. The intellectual property exposures, such as copyright or trademark infringement, are an unpredictable and rapidly evolving area because the law as it applies to the Internet is not clearly defined.

For example, no clear definition has been established for standards of copyright infringement. Does a link from another site to your content infringe on your copyrights? Such a claim might arise if a website developer puts a website together for a client that includes a link to another site. If the owner of the other site brings a claim against the linking site owner for copyright infringement the IT professional will probably be brought in.

Professional Liability insurance for IT professionals, sometimes called errors and omissions or E&O insurance, is available from a wide range of specialty lines insurers. Coverage and pricing varies greatly depending upon the type of organization, size, location and the specific services provided.

Because this coverage is a new and evolving it continues to change rapidly. Specific coverage provisions are important for IT professionals. One example of this is an IT professional's need for liability coverage for unauthorized access and virus protection. This coverage would protect the IT professional if its action caused a virus to be introduced to a client.

Limits and deductibles vary with the size and type of insured. Standard limits for most small to medium sized organizations start at $1.0 million. Policy forms vary significantly, but the majority are claims made forms with defense costs included within the limit and deductibles.

Opportunities

Because the segment is new and rapidly changing, the IT professional segment is a significant opportunity for new sales. Many IT professional organizations do not buy professional liability coverage now, and others may not have reviewed the latest coverage options. In addition, IT professionals are increasingly being required to carry professional liability coverage because of tighter contractual obligations.

Mercator Risk Services provides coverage for a wide range of IT professionals. Please let us know your client's needs and we will provide you with information and assistance with your particular situation or account, and professional liability coverage. For assistance with a particular account or coverage situation please contact us at info@mercatorpro.com or see contact information on this website.

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