Changes to Professional Indemnity insurance could catch out some IT providers and consultants

Professional Indemnity insurance for IT providers and consultants is becoming a minefield. Insurers are re-underwriting risks and are ramping up premiums. Depending on your particular business and insurer, you may also face new cover restrictions, the consequences of which are not always obvious.

It is essential that you understand the changes being applied and are comfortable with any increased risk which may need to be carried by your business.

Examples of potential changes that could affect your cover:

• An ‘Any One Claim’ limit may be replaced with an aggregate limit applying across claims in the policy year. Potentially, the limit could be used up after one claim at the start of the year, leaving you with no cover for the rest of the period.
• You may find that defence costs are now included in the limit whereas before they would be paid in addition.
• Insurers may apply lower , inner limits for loss of personal data or breach of confidentiality.
• Some insurers are excluding Cyber Breach and Loss of Data under their Professional Indemnity section of cover.
• A requirement by insurers to have multi factor authentication across all entry points.
• Increased scrutiny of your contract terms by insurers, to ensure you are restricting your exposure as much as possible and not accepting liability for consequential loss or special damages.

How we can help

It is essential to work with an insurance broker, like Howden, who has experience in the sector and wide market reach. We can ensure underwriters are approached in the right way, detailing the full extent of the services you offer and deliver, together with all positive risk features such as industry accreditations and risk management. We can also explain any changes in cover and suggest options to plug any gaps.

The recommendation may be to purchase a separate Cyber & Data section of cover, ideally with the same insurer who is providing the Professional Indemnity cover.

It may be advisable to purchase excess layers of cover topping up the Professional Indemnity and Cyber cover. This will be particularly relevant if your insurer can no longer provide the limits you need.

If you would like to discuss Professional Indemnity insurance, please give me a call on 07824 887730.