Market report: keeping up with technology

As the pace of innovation in technology-based industries gets ever faster, so have the risks and the requirements to hedge those risks. Investment is pouring into the sector at a remarkable rate—yet investors need reassurance that their investments are protected in every way possible.

Perhaps paradoxically, the solution to this problem is an industry more associated with tradition and aversion to change. Yet the insurance industry has made remarkable advances of its own to keep pace with the requirements of its technology clients—its willingness to get to grips with cyber insurance is testament to this.

As the requirements of technology companies become ever more complex, specialist re/insurer MS Amlin has made a new move to keep pace with change. It has launched a new product designed to capitalise on the rapidly growing technology sector in the UK by combining a number of the risks they face into a single product.

MS Amlin’s new Technology Combined product, a comprehensive all-risks policy designed for the technology sector, is designed to offer clients more options and greater flexibility. It is modular in nature and allows clients to pick and choose products, having as much or as little cover as they require.

Some of the risks it covers include cyber and technology E&O, business interruption, terrorism, computer breakdown, equipment breakdown, public and products liability, directors’ & officers’ liability and personal accident.

“At MS Amlin we understand the importance of specialism and producing tailored products to meet our clients’ individual business needs,” says Richard Coxon, head of UK underwriting at MS Amlin.

“Technology Combined is designed to reduce any gaps in cover our clients may have, and gives them the ability to shape their insurance solution depending on their most prevalent risks.

“In a world where the nature of risk continues to evolve, we remain focused on the client and providing flexible options that work for them.”

Money pours in

The UK-based insurer is in the right place to make such a move. The UK technology sector is becoming a major success story with 2.7 million technology-based businesses operating in the country; the sector is also growing at 2.5 times the rate of the rest of the UK economy.

Other statistics put this success story into context. Over the past two years, more than £5 billion
($6.5 billion) of venture capital money has flowed into this sector in the UK—three times more than other leading EU countries. This is partly aided by the UK government investing in the sector heavily in various ways—but it all adds up to a lot of technology companies that need insurance.

“The technology sector is a major opportunity for insurers,” says Stephen Wares, lead cyber underwriter at MS Amlin. “This is a growth sector with a lot of money being invested into it. It is spread right across the UK and each business is very different in what it does and its insurance needs. This product has been launched to tap into that demand and make a difference to the sector.”

Wares notes that an array of new technologies such as robotics, virtual reality and artificial reality have revolutionised the capabilities of technology companies. Equally, the transition of data security from being office-based to cloud-based has shifted where the ultimate responsibility for data security lies, changing the nature of the risks in this sector.

“That has been the big story of the last 10 years, but the next 10 will be even more fascinating,” Wares says.

He adds that the technology industry has already embarked on another fundamental shift whereby the responsibility and thus liability for many new products could sit with the developer rather than
the owner.

“Think autonomous cars, parking assistants, anything where technology is taking over our day-to-day tasks. It is a fundamental shift in the way technology and human beings interact and changes the risk dynamic,” he says.

Tailored solutions

Wares explains that the new product was partly based on demand from clients. He stresses that the coverages were all being written before by MS Amlin—but separately. The new launch packages them together, making it easier for clients but maintaining the involvement of specialist underwriters for each component risk internally.

“The product is combined under one schedule and one policy but in the background there are individual underwriters taking care of each specialty area—we see that as a benefit,” he says.

“This is not being underwritten by a generalist underwriter, and that is as important on the claims side as well.”

He stresses the important role that brokers have in terms of educating clients around the risks they should take note of and the insurance products that can cover them. He explains that brokers assess clients to establish their needs and levels of risk and base the insurance products they need on these facts.

“It is very similar to the journey the cyber market has been on for many years but with much wider parameters,” Wares says.

“Cyber is changing constantly in terms of the nature of the threat and how we manage that, and we need to be keeping pace constantly. When you consider the wider technology landscape, with innovations such
as blockchain and artificial intelligence coming through, the need to keep up with developments is even more critical.

“It is one thing to understand the theory and quite another to grasp the practical implications for our customers and how we can help them. We are seeing a lot more fintech and insurtech companies being launched and they all have unique requirements.

“There is a plethora of risks and it is our job to understand them. But that is why we have renewed our offering in this way,” he concludes.

Stephen Wares is the lead cyber underwriter at MS Amlin. He can be contacted at: stephen.wares@msamlin.com

Richard Coxon is head of UK underwriting at MS Amlin. He can be contacted at: richard.coxon@msamlin.com