Archive February 2012

Design and build contractors…….Do you have a “design flaw” in your insurance portfolio???

29/02/2012 in Professional Indemnity Insurance

Historically, contractors have avoided Professional Indemnity insurance by persuading clients that they have no design liability and that design professionals e.g. architects, engineers and other such professionals will have such cover and that would be sufficient. In recent years though, contractors are increasingly taking on a design liability, either by employing their own in- house professionals or by assuming a liability where they sub contract out the design element.

“The Design Build method now accounts for 75% of all building projects in the UK and offers the client a ‘one stop shop’ for his building.“

The type of work undertaken will of course be a key concern for Insurers and it is worth looking at in a little more detail:

• Full blown design and build – this is where the contractor does everything using its own employees i.e. all the design work, the supervision of construction and the building work. The professional exposures are the same as a consultant within the construction industry.

• Contingent design and build – This is where the contractor takes on the contractual responsibility for the design but sub contracts out such work to others. The design work would be carried out by firms of architects and engineers who should carry their own professional indemnity. In view of the fact that insurers should be able to recover payments from those professionals who have carried out the negligent work, (any payments made emanating from their negligence) this is regarded as lower risk. It is vital here that the contractor ensures that any consultants it employs carry, and continue to carry, PI insurance.

• Pure contracting – This is where the contractor purely builds from the designs and under the supervision of other professionals who have been appointed directly by the client. This is considered by insurers as low risk work but is not without its dangers.

• Fees – Sometimes a contractor earns fees (as opposed to turnover which is the correct description for the three categories above). They may be a project manager for other contractors or carry out other professional functions such as design or quantity surveying. These activities would normally be rated the same as a professional firm carrying them out.

For help and advice about Professional Indemnity insurance please contact Scott Sayce, Head of Professions on 0118 9165 483, or complete one of our enquiry forms

First IPv6 (Internet Protocol Version 6) Distributed Denial of Service (DDOS) Internet attack – What are the implications?

21/02/2012 in Cyber Liability Insurance, Uncategorized

IPv6, the follow on from IPv4, appears to now be large enough for IPv6-based attacks. Like all cyber-attackers they continually look for ways to penetrate any new technology. Arbor Network’s Worldwide Infrastructure Security Report had predicted IPv6 DDoS attacks, and commented:

“This is a significant milestone in the arms race between attackers and defenders,” stated the report. “We believe that the scope and prevalence of IPv6 DDoS attacks will gradually increase over time as IPv6 is more widely deployed.” And, now, they’ve started.

Arbor Networks’ Senior Software Quality Assurance Engineer Bill Cerveny commented “Gone are the days when a network failure on the IPv6 Internet would be ignored and undetected because, well, no one noticed (or cared). The same thing that has made the IPv6-enabled Internet ‘valuable’ has also made it an increasingly valuable venue for attacks. While the frequency of attacks is relatively modest on IPv6 today, we expect that accelerated adoption will be followed in-kind by an accelerated pace of attacks.”

With trouble like this awaiting IPv6 systems on the Internet, it’s clearly time to look towards risk management protections. To bolster your risk management you can look to put in place insurance that will help protect your business from Cyber-Attackers.

For help and advice about cyber insurance please contact Scott Sayce, Head of Professions on 0118 9165 483, or complete one of our enquiry forms.

Cloud Computing – TO BE OR NOT TO BE SECURE!

20/02/2012 in Cyber Liability Insurance

As cloud computing popularity soared through 2011 and is continuing to gain momentum in 2012, will last year be remembered as the year of the Cloud or the year cyber-attackers jumped for joy!

Businesses are having to be concerned with Cloud service software being misconfigured and that employees can be careless with data (humans and machines do not always mingle well!!) however, the largest threat and source of fear comes from cyber-attackers…. So what can you do to protect your business and your clients’ data?

Cyber insurance can be a very valuable tool for Cloud customers who are not able to get their providers to take financial responsibility for security and privacy risk contractually. The correct cyber insurance policy should cover data security and privacy breaches of not only the computer networks directly under the control of the insured client, but also those computer networks operated by third parties for or on behalf of the insured client. What this means in the Cloud context is that cyber insurance may cover data breaches of the Cloud provider’s systems where the Cloud customer’s/insured’s data is stored and processed on those systems. Therefore, if a Cloud customer cannot get reasonable contract terms from its Cloud provider and assuming the correct cyber coverage has been purchased, it will have a fall-back risk transfer and will not be retaining that risk solely on its own.

For help and advice about Cyber insurance please contact Scott Sayce, Head of Professions on 0118 9165 483, or complete one of our enquiry forms.

Be prepared to travel

18/02/2012 in High Value Homes

It is the time of year when we are all looking to book our summer holiday and January is historically the Travel Agents busiest time. There has been a trend over the last few years of holidaymakers venturing further afield, although the European Union still remains the number one destination for the British, with Bulgaria taking the top spot.

The Foreign and Commonwealth office launched an on-going campaign in 2001 called ‘Know Before You Go’ (KBYG) with just over 500 travel industry partners to help Brits to stay safe and healthy abroad.

The campaign was launched to promote these key messages:

get comprehensive travel insurance, and read the small print

check the FCO’s country travel advice

research your destination – know the local laws and customs

research the health risk on the NHS travel health information page as soon as possible before travelling, and if necessary visit your GP

check your passport is valid and you have all necessary visas

make copies of important travel documents and/or store them online using a secure data storage site

tell someone where you are going and leave emergency contact details with them

take enough money and have access to emergency funds

Every year thousands of British travellers seriously regret not taking these simple steps.

Most high value home insurance policies can be extended to include annual travel insurance. For further information contact Jeremy Edwards on 01189 165 488 or complete one of our enquiry forms.

Is cyber and privacy insurance important for recruitment consultants?

17/02/2012 in Cyber Liability Insurance, Recruitment Industry Insurance

Recruitment Consultants have access to sensitive information for the personnel they place including salary details and full employment history. Whilst discretion is paramount, there is a possibility that information can end up in the wrong hands. For companies offering an online facility there is certainly a higher level of risk as personal information could be lost if a system was to be hacked.

Our recommended product includes cover for system damage as a result of hacking as well as providing an indemnity for cyber and privacy risks. A breach of privacy issue needs to be dealt with quickly and efficiently as delays and uncertainties are likely to affect the reputation of the company and ultimately the brand.

For help and advice about Recruitment industry insurance please contact Scott Sayce, Head of Professions on 0118 9165 483, or complete one of our enquiry forms

Should a software company buy professional indemnity insurance???

16/02/2012 in Professional Indemnity Insurance

Information technology is the backbone of many businesses yet is poorly understood by many. There’s often an enormous mismatch between client and professional expectation, probably unique to the information technology industry as regards professional indemnity claims. IT risks used to be treated as “Miscellaneous” but, as the industry has emerged into one of worldwide importance, so the understanding of the legal profession (and thus insurers) has led to a specific focus on IT in its own right.

Below are some professional indemnity claims that software companies have faced:

• The insured designed a customer management software package. It was alleged that the software failed to comply with the agreed functionality. Amount paid: £350,000

• The insured configured an off-the-shelf software package for use by the client, and sold and installed associated hardware. There were serious difficulties following installation, leading to the client refusing to pay the balance outstanding and threatening a claim. Insurers paid the outstanding balance to the insured, avoiding the expense and reputational damage of a legal case. Amount paid: £55,000

• It was alleged that there were substantial deficiencies in the design of a software package, resulting in the system failing to meet the client’s requirements. Amount paid: £450,000.

For help and advice about Professional Indemnity insurance please contact Scott Sayce, Head of Professions on 0118 9165 483, or complete one of our enquiry forms

What is Professional Indemnity Insurance?…..and why do I need it???

15/02/2012 in Professional Indemnity Insurance

Professional indemnity insurance is liability insurance that covers your business in the event that a third party claims to have suffered a loss as a result of professional negligence.

Many professions are required to have PI insurance cover as a regulatory requirement or as part of their professional authorisation. This includes solicitors, accountants, architects, insurance brokers and financial advisers. Many consultants, technology companies, media companies, designers and other emerging professions also choose to or are contractually required to have this type of insurance.

Making sure you are properly covered is an important aspect when considering PI insurance. As an example PI cover is usually on a claims-made basis. This means that the policy will only cover claims that are made while the policy is live. So ensuring you have the correct retroactive cover in place to give you peace of mind.

For help and advice about Professional Indemnity insurance please contact Scott Sayce on 01189165483 or complete one of our enquiry forms.

Recruitment Companies and Vicarious Liability Cover!

14/02/2012 in Professional Indemnity Insurance, Recruitment Industry Insurance

Vicarious liability is a relatively simple concept and means being responsible for the negligence of another party. Since recruitment agencies can be deemed the employer of temporary workers, they can also be deemed responsible for the temporary workers’ negligence, even when they have not been responsible themselves in supplying their recruitment service.

Increasingly, recruitment agencies are signing up to hiring clients’ terms of business, and more agencies have contracts of employment with temporary workers than ever before, particularly as a consequence of the agency workers regulations which came into effect on 1st October 2011. This increases the likelihood of recruitment agencies being deemed the employer of the temporary workers, and as such, increases their exposure to vicarious liability. In one example, a recruitment agency supplied a construction project manager to a London local authority, who over the course of two years was accused of approving 17 false projects and defrauding the council out of a staggering £2.8m. The council argued they are not supervising nor employing the worker, and that the recruitment agency is responsible for the actions of the workers they supply and are suing the agency for their loss.

For help and advice about insurance for the recruitment and staffing sector please contact Scott Sayce, Head of Professions on 0118 9165 483, or complete one of our enquiry forms

How does public and employers liability insurance work?

13/02/2012 in Employers Liability Insurance, Public Liability Insurance

Public liability insurance offers financial protection against claims from members of the public for bodily injury or property damage, providing that the policyholder is legally liable.

Employer’s liability provides financial protection against claims from employees for bodily injury, providing the employer is legally liable.

There are two ways that Insurers calculate the premium for these policies. For smaller businesses the insurers calculate the premium based on the number of employees, this is called “per capita” rating.

For larger companies the premiums tend to be rated on the estimated turnover and wage roll. Estimates are provided at the outset of the insurance and insurers charge a deposit premium based on these figures. At the end of the period of insurance the insurers will ask for a declaration of wages and turnover and then adjust the premium accordingly.

Other factors in determining the premium will be the public liability indemnity limit. The minimum indemnity limit is normally £1,000,000. It is commonplace for indemnity limits to be £2,000,000 or £5,000,000. Public liability for scaffolders and other higher risk occupations can require indemnity limits of £10.000,000, especially if work is being carried out for local authorities.

There are also various specialist insurance schemes for industry sectors. For example there are specialist insurance policies for the cleaning industry and for the security sector.

For further advice on liability insurance, please contact Tony Gibbs on 01189 165 485 or complete one of our enquiry forms.

Technology Companies…..Don’t Leave Yourselves Unsecured!!

13/02/2012 in Professional Indemnity Insurance

Technology companies face unique risks and require specific insurance coverage’s to protect their business from financial loss. Technology professional indemnity insurance is a key element of risk management in the technology industry.

Typical reasons that professional indemnity claims are made against a technology company include:

• Programming errors
• Poor customer communication
• Problems with large integration/installation projects
• Development problems
• Problems with combining or integrating software or hardware components
• Customer changing project scope (often referred to as “project creep”)
• Turnover of key personnel
• Short cuts during testing
• Poor accounts receivable controls that require the tech company to sue their customer for fees owed and this results in a countersuit for negligence in the performance of the tech services/products
• Shortfall in externally furnished products or externally performed tasks

Typical allegations in litigation for professional indemnity:

• Negligence
• Breach of Contract
• Failure to Perform
• Breach of Warranty
• Misrepresentation
• Fraud
• Intellectual Property Rights Infringement

For help and advice about professional indemnity for the technology industry please contact Scott Sayce, Head of Professions on 0118 9165 483, or complete one of our enquiry forms.