Insurance Program Results

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Digital & Software Development: Application Developers

Despite the potential for premium and minimal claims activity, carriers remain tentative in writing coverages for smartphone and tablet application developers. Domestic carriers AIG, AXIS, Berkley, CNA and Beazley offer coverage for app developers but express limited interest in this market. None have reported an increase in premium volume for this class of business during the past year. Most carriers show little interest in working with startup companies, preferring established app development companies that would pay an annual premium exceeding $100,000. Most startup companies lack experience and the funds to ensure that, from a legal perspective, an app or software can be cleared with proper permissions for intellectual property before release to consumers. CFC Underwriting Ltd. remains one of the only insurers with a known appetite for startups or smaller app development companies. Hiscox recently entered this segment but with an appetite limited to non-game applications.

Established app development companies and startups generally require the same coverages as most commercial businesses, including commercial packages, technology E&O, cyber liability, workers compensation, crime and employment practices liability. The nature of application development being deadline-based places heavy emphasis on workers comp and employment practices liability, since deadlines lead to some employees working longer hours without the proper compensation needed to avoid wage and hour claims. Exposures in this segment that make the market less appealing for insurers include advertising injury, personal injury, bodily injury and mental anguish due to interaction with other app users, in addition to intellectual property infringement.

Cyber liability is naturally in demand for this risk since in-app purchases present the potential for exposures related to data theft. Data collection within apps also brings up concerns about whether or not users are aware that their data is being collected and shared. Policies clearly will not support unlawful collection of data, but most insurers remain hesitant to provide coverage, citing a lack of clarity on the collection of data used to analyze user behavior or for sale to advertisers. Most insurers remain unwilling to cover applications that contain violence or adult content, a theme common among markets writing coverage for game apps.

Crittenden expects carriers will favor companies developing less risk-prone applications, such as those used for educational or office purposes, and those that have limited social media elements or interactivity with other app users. 

Applications that enable users to interact with others present exposures that could lead to personal injury claims, and since such claims can be caused by anonymous users and the fact that there is no clear specification of what constitutes as a personal injury via an application, covering such claims remains problematic and coverage nonexistent. Limits vary based on what is included in a policy. Higher limits are only available for general liability coverage. Presently, no carrier will write general liability limits exceeding $5 million for application developers. AXIS, Hiscox and Beazley don’t specify minimum premiums and instead base the minimum on the risks faced by the application developer. Only OneBeacon, or OBI National Insurance Co., sets a minimum premium of $5,000 for app developers and $10,000 for developers of game applications. The carrier requires a minimum retention of $10,000 for general app developers and $25,000 for game developers. OneBeacon doesn’t have a large appetite for this segment, though, and prefers to only cover applications used for education or work purposes. The insurer finds most of its business with word processing or image editing application developers.

CNA will write E&O in this segment, including professional indemnity, general liability and advertising injury, but only has an appetite for developers of applications with limited social interaction or an educational focus. CNA’s coverage emphasizes intellectual property clearance and licensing agreements. Hiscox recently began to offer E&O but will sublimit intellectual property on technology E&O to $250,000. The carrier excludes client content coverage for data collection. Hiscox remains unwilling to cover game application developers.

Copyright © Crittenden Research Inc., August 17th, 2015

AFB Media Tech®

Administered By: Beazley

Distribution: Direct/Broker

Industries:

Application Service Providers (ASPs), Computer Networks, Data Processing & Management, Digital & Software Development, Internet Service Providers (ISPs), Manufacturers (Hardware), Marketing & Advertising (Online), Project Managers/Project Management, Staffing Agencies, Technology Risks, Telecommunication Services, Web Hosting

Carriers: Beazley Insurance Co. Inc.

Coverage: Cyber Liability, Errors & Omissions (E&O), Excess, Media Liability, Privacy Liability/Notification Expense, Professional Liability, Umbrella/Excess

Limits: up to $20 million

Integrated Technology

Administered By: Philadelphia Insurance

Distribution: Carrier Direct

Industries:

Computer Networks, Data Processing & Management, Digital & Software Development, Technology Risks, Telecommunication Services

Carriers: Philadelphia Insurance Co.

Coverage: Commercial Auto, Commercial Property, Cyber Liability, Errors & Omissions (E&O), General Liability, Media Liability, Network Security Liability, Package, Umbrella/Excess

Limits: up to $15 million (For Select Risks)

E&O For Tech/Media/Telecom

Administered By: XL Catlin

Distribution: Direct/Broker

Industries:

Accountants & Accounting Services, Colleges & Universities, Digital & Software Development, Distribution Risks, Energy Companies, Financial Institutions, Healthcare Systems, Insurance Agents, Lawyers, Manufacturers (Hardware), Manufacturers/Manufacturing Risks, Real Estate Agent/Broker, Retail, Technology Risks, Telecommunication Services

Carriers: XL Insurance Co.

Coverage: Cyber Liability, Data Security, Errors & Omissions (E&O), Excess, Network Security Liability, Privacy Liability/Notification Expense, Umbrella/Excess

Limits: up to $10 million

SafetyTek

Administered By: Stuckey &Co.

Distribution: MGA

Industries:

Computer Networks, Digital & Software Development, Internet Service Providers (ISPs), Technology Risks, Telecommunication Services, Web Hosting

Carriers: ACE USA

Coverage: Commercial Property, Cyber Liability, Employment Practices Liability (EPL), Errors & Omissions (E&O), General Liability, Network Security Liability, Privacy Liability/Notification Expense, Workers' Compensation

Limits: up to $5 million (Tech E&O)

TechGuard™

Administered By: NAS Insurance Services

Distribution: MGA

Industries:

Application Service Providers (ASPs), Computer Networks, Consultants/Consulting Risks, Data Processing & Management, Digital & Software Development, Internet Service Providers (ISPs), Manufacturers (Hardware), Marketing & Advertising (Online), Project Managers/Project Management, Staffing Agencies, Telecommunication Services, Web Hosting

Carriers: Lloyd's of London

Coverage: Cyber Liability, Errors & Omissions (E&O)

Limits: up to $10 million

ACE DigiTech®: Digital Technology and Professional Liability

Administered By: Chubb Ltd. (Formerly ACE Group)

Distribution: Carrier Direct

Industries:

Data Processing & Management, Digital & Software Development, Technology Risks

Carriers: ACE Group

Coverage: Cyber Liability, Errors & Omissions (E&O), Excess, Media Liability, Professional Liability, Umbrella/Excess

Limits: up to $15 million

 

Cyber Liability for Mobile App & Game Developers

Administered By: CRC Insurance Group

Distribution: Program Administrator

Industries:

Digital & Software Development, Technology Risks

Carriers: Lloyd's of London

Coverage: Errors & Omissions (E&O), Intellectual Property, Media Liability, Network Security Liability, Privacy Liability/Notification Expense

Limits: up to $10 million

Intellectual Property Insurance

Administered By: Intellectual Property Ins. Svcs.

Distribution: Program Administrator

Industries:

Chemical Manufacturers/Distributors, Digital & Software Development, Medical Devices, Pharmaceutical Risks, Telecommunication Services

Carriers: Lloyd's Cover Holder

Coverage: Intellectual Property

Limits: up to $5 Million (Aggregate )

RPS Tech and Cyber Coverage

Administered By: RPS Technology and Cyber Risk

Distribution: Program Administrator

Industries:

Digital & Software Development

Carriers: AIG, Beazley Insurance Co. Inc., Berkley Insurance Co., Chubb Group of Insurance Cos., CNA Insurance Cos, Hiscox Insurance Co. Inc., OneBeacon Insurance Co.

Coverage: Commercial Package (BOP), Cyber Liability, Employment Practices Liability (EPL), Errors & Omissions (E&O), Workers' Compensation

Limits: up to $5 million