News & Events

The Changing Shape of Information and Communication Technology (ICT) Insurance

Monday, June 26, 2017

The ICT market is ever growing and evolving making it one of the fastest growing global business sectors.  The speed at which this space is developing requires specialist underwriters who understand the constantly changing requirements of such businesses. On 27 May 2017, British Airways experienced a catastrophic IT outage which resulted in approximately 75,000 passengers having their flights either cancelled or severely delayed. This chaos was reportedly caused by an “uncontrolled return of power” following an outage that damaged servers at its data centre. In such circumstances, it is important that insurance policies will respond and provide adequate protection to the ICT businesses involved.

It is not only large, corporate operations that are heavily dependent on technology, but SME organisations face the same risks as they become ever more reliant on IT to perform for the majority of their tasks from simple data input to the management of high risk documents. Taking this into account it is more important now than ever before that such businesses have suitable Professional Indemnity insurance cover that will respond to a claim if such a scenario arises.

What are some of the essential areas of cover for ICT companies?

Breach of Contract

Generally speaking the majority of claims and notifications relate to breach of contract. It is vital to ensure that the policy responds appropriately to such areas.

Unauthorised access, use of and denial of service attacks

In the majority of projects there is an element of network security. Technology companies can face a potential exposure of opening their clients systems to attack if perhaps security has been configured incorrectly or if security features are not restored following standard procedure system maintenance. The growth of hosting and software services mean that a denial of service attacks on systems, or infiltration of various systems, may result in third party claims.

Public relations and crisis management costs

Reputation and public perception of a company is one of the biggest concerns for owners of any sized company. Policies can provide a fund to mitigate any damage to the insured’s reputation.

Liquidation Damages

Liquidation damages are now a common element on technology contracts due to the changes in the way in which companies contract. Generally speaking, liquidation damages are excluded in the majority of policy wordings but some policies in the market recognise that such liquidated damages should be covered as long as they are a fair and reasonable estimate of the damages that have occurred.

Infringement of Intellectual Property Rights (IPR)

Breach of a third party’s Intellectual Property (“IP”) is likely to result in the third party seeking compensation, so a policy that will provide for such a situation is important but is not always included in policy wordings.

Notification costs following a loss of data

There are vast amounts of personal data being held across various online platforms, so there are continually changing attitudes as to how data losses should be handled, meaning that costs of notifying those whose data has been lost should be covered as standard in insurance policies.

At Tokio Marine HCC we are able to consider all risks in the ICT sector, providing cover from small start-ups to large corporations. For more information about the risks in the ICT space and how we can help, please get in touch:

+44 (0)20 7702 4700


The Telegraph and Tokio Marine HCC’s Information and Technology brochure