Home / International / Tech-failure cover underwhelms
23 March 2020
Insurance options for many technological risks are perceived as inadequate by most risk professionals, a survey by Marsh found.
Less than half of more than150 risk leaders at technology companies who were surveyed for Marsh’s latest Technology Risk Study rated current insurance solutions as “mostly aligned” or “well matched” to the risk.
The survey, now in its fifth year, draws on responses from professionals around the world.
“Many respondents rate the insurance solutions for emerging risks to be less than adequate,” Marsh says. “Few (technology) risks are viewed as being adequately addressed by available insurance solutions.”
More than half of those surveyed had either negative or neutral opinions on the adequacy of insurance solutions for data security and privacy, IT resilience, intellectual property, regulatory compliance and multinational exposures.
More established risks, such as tech errors and omissions and business interruption, received slightly higher ratings.
Many survey respondents said they were changing limits, retentions or terms and conditions to mitigate premium increases in the face of significant reductions in capacity.
Marsh estimates global commercial insurance pricing increased for the ninth consecutive quarter in the last three months of 2019, with average commercial insurance pricing up 11%.
Technology risk leaders may benefit by looking for innovative solutions, Marsh says. Investing in analytics or investigating alternative capital could protect budgets and limit exposure.
“Take control of the process and become a seller of risk rather than a buyer of capacity,” Marsh says.
The five risks topping the survey are data security and privacy, IT resilience, tech E&O, intellectual property and Internet of Things failure.
Bodily injury or property damage to others was only considered a top risk by 20% of survey respondents but Marsh warns that with the rise of autonomous vehicles, industrial IoT and smart homes, technology failure has potential to go beyond data breach and cause physical harm to people and property.
“Forward-thinking risk leaders should ensure they are covered for this growing liability,” the Technology Risk Study says.