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“These lines are converging more and more,” Molitano says. “Media companies have Internet sites, technology companies are doing a lot more media, so services that these risks perform fall into a lot of different areas. Apple is a good example. As everyone knows, they provide technology products and have a substantial web presence involving media. And Warner Bros. has movies, TV, and a lot of web presence. So I like to joke that our nerd factor is growing exponentially.”
That “nerd factor” is the expertise that insurance professionals, and insured professionals, need to navigate a changing landscape of technology-created risk factors.
“The greatest liabilities exist in environments like this because everyone is making different decisions,” notes Paul Romano, President of OneBeacon Professional Insurance. “Privacy and security, media liability, those areas have the greatest variation in insurance products, so everything has to be treated as a work in process. In the past, professional insurance had a relatively fixed risk profile, but now you can be behind the curve because of a new technology or new case law emerging from claims.”
In the world of professional insurance, “there wasn’t a lot of gray in the beginning, a staffing firm went with a miscellaneous policy, a media company went on a media form,” says Romano. “Now advertising agencies also do Web design and a staffing company has Web site where you can apply online. It’s not so black and white anymore.”
The result? Underwriting and risk management in this environment requires excellence at understanding and addressing cross-functional risks. In some cases, insureds will be guided to select a stand-alone technology errors and omissions (E&O) policy. In other cases, it involves the right combination of add-on forms.
“If it’s a Web site designer or custom software developer, their main service is technology, so we have a technology form,” Molitano explains. “We also have forms to address other exposures: a media form, a technology form, a miscellaneous form or a combination of those.”
OneBeacon’s technology professional policy is designed for companies and professionals that provide technology services, such as code writers, technology consultants, game designers, installers and integrators of software systems.
“This form includes technology services, professional services, media, technology products, and network security and privacy coverage,” Molitano explains. As technology and exposures continue to change, OneBeacon attempts to address these emerging issues. “We try to address needs as our insureds grow and privacy laws change.”
Attempting to address emerging exposures is only part of the process. Increasingly, insurance providers are attempting to assist insureds in risk management efforts. OneBeacon provides substantial technical expertise in the underwriting process and offers services ranging from informational webinars to other educational resources .
Currently, professionals must cope with a patchwork of state laws related to technology, networks and information privacy.
“For technology and network security, the risks continue to grow and are changing,” Molitano explains. “There’s no federal mandate yet. All but four or five states have laws on the books, but they are all different.”
Molitano’s advice to business professionals? “If there are changes in risk factors during the year, good companies will notify their broker and they will tell us at renewal.”
And his advice to brokers? “The brokers are at times in a tougher spot than we are because we see the claims regularly so we know the exposure. The broker has to convince people they have this exposure and it’s real,” Molitano says, adding that because “risk increases in the tough market, brokers need to do a good job telling us what we need to do. We like to hear how we can be better.”
That’s a simple but increasingly important nuance for successfully underwriting and managing technology-related risks across a professional landscape painted in shades of gray.