Insurance Program Results
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 |
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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 |
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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 |
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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 |
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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 |
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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 |
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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 |
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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 |
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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 |
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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