Mactavish, the leading independent expert on commercial insurance placement and disputes, is seeing a significant increase in UK commercial property insurance policies removing all elements of cover that relate to technology such as data loss or IT meltdowns even if the loss arises from ‘traditional’ types of property loss such as fire, leaving businesses unknowingly exposed and under-insured in this area.
This alarming trend has been prompted by UK insurance bodies the Prudential Regulation Authority and Lloyd’s of London mandating greater clarity over what commercial property insurance policies cover in relation to a cyber-attack. Many clients are now being told that even loosely tech-related elements of cover in their commercial property insurance cover are being removed outright, and they will now have to buy separate cyber cover to insure against these risks. Yet this black and white approach fails to appreciate the integral role technology plays in almost every business today, and the cyber insurance market lacks sufficient capacity to write large-scale property risks.
Rob Smart, Technical Director at Mactavish said: “While we welcome attempts to bring greater transparency to the insurance market, the redrafting of many commercial property policies is leaving clients under-insured and exposed to a range of broadly “tech-related” risks which they had believed would be covered. Some of the new wording we are seeing goes far beyond the intent of the Lloyd’s mandate, and it means clients are no longer covered in areas such as loss of data from flooding or a fire for example – even if it’s not related to a cyber-attack.
“Clients are being forced to take out separate cyber insurance to cover these excluded risks, but often this cannot meet their needs either without significant alterations.”
One reworded commercial property insurance policy reviewed by Mactavish excluded all losses “indirectly contributed to by” IT or data failure, even “regardless of any other cause or event contributing” to a loss.
Mactavish is the UK’s leading independent expert on insurance placement and disputes. It has been operating in the commercial insurance sector for over 15 years.
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