In the fast-paced, risk-heavy environment of the UK technology sector, insurance is a critical tool for safeguarding operations, employees, and directors. However, recent research by Markel reveals that tech company owners often face challenges when looking to cover their business risks. In this piece for Insurance Edge, Markel’s lead technical underwriting manager for technology risks, Nick Burgess, dives into the detail of the research findings.
Insurance can be a complex issue for businesses. For tech companies this is no different, with concerns ranging from the clarity of cover and wordings to the importance of insurer reputation and the need for specialist broker guidance.
Cover and wordings can cause confusion
For technology SMEs, the need for comprehensive insurance cover is clear. Risks such as cyberattacks, client disputes, and data losses pose significant threats to their operations and reputation. Business owners recognise the importance of protecting their companies from these dangers, yet many find the process of securing the right coverage confusing and complex.
Insurance jargon, such as the difference between ‘Liability’ and ‘Indemnity’ or the meaning of ‘Fidelity’ often leaves decision-makers confused about what policies actually protect against. This lack of clarity can lead to businesses either under-insuring, leaving them vulnerable to significant financial exposure, or over-insuring, resulting in unnecessary costs.
“What it (the policy) covers is important. It needs to be easy to understand, and the features need to be clear.”
Compounding this challenge is the difficulty of determining which types of insurance are essential versus those that are optional but prudent. For many tech business owners, peace of mind comes from simply opting for popular cover types they find online.
Clear, accessible information about policy features and exclusions is key to addressing these concerns. Business owners increasingly demand straightforward language that allows them to make informed decisions about their coverage.
The insurer’s brand and reputation makes a difference
In the tech sector, an insurer’s brand and reputation play a role in client decision-making. Familiarity with an insurer’s name creates trust, particularly when that insurer is seen as a specialist in technology risks. Business owners often equate a strong reputation with expertise and reliability, qualities that are vital when managing complex risks unique to the sector.
“A lot of it is reputation. I want to know that they are a specialist in their field.”
For many technology firms, the perceived size and experience of an insurer are also crucial. Established brands with a history of serving tech clients instil confidence that the insurer understands their unique needs and challenges. This is particularly valued when insurers provide tailored insights or sector-specific recommendations, demonstrating their expertise and commitment to supporting the industry.
A personal and tailored approach also influence perceptions of trustworthiness. Technology businesses appreciate insurers who go beyond standardised approaches, offering tailored solutions that address their specific concerns.
Specialist broker guidance is perceived as valuable
Many SME tech companies turn to brokers for guidance when it comes to insurance. The complexities of tech insurance—particularly in areas like cyber security—mean that business owners value brokers who can provide expert advice and ensure adequate protection without unnecessary expense.
“I liked that they went through a quick discovery session with me. They understood my questions and answered them and I liked that they could collect all the information in one place and I didn’t have to become an insurance specialist.”
Tech firms rely on brokers to clarify which covers are essential and which offer additional protection, ensuring that coverage aligns with the company’s specific operations and risk profile.
Recommendations from industry groups or professional networks guide business owners to specific brokers. These brokers are used not only for their expertise but also for their ability to communicate effectively and maintain ongoing relationships. Regular check-ins and updates on emerging risks ensure that businesses remain protected as their operations evolve.
Cyber security is a particularly pressing concern for technology businesses, with many reliant on brokers to help them secure appropriate coverage. Brokers with a strong understanding of cyber risks, offer proactive solutions, and adapt policies to reflect shifting market dynamics are seen as invaluable partners.
“Cyber security is a big issue for anybody running a business. We are reliant on security experts. The question is, what level should we go to to safeguard our data?”
The complexities of the insurance landscape mean that tech businesses need more support than ever. Insurers and brokers who offer clarity, sector expertise, and personalisation can build lasting relationships with these clients, helping them protect against risks with confidence, ensuring they remain resilient in a rapidly changing environment.
Be the first to comment