Rethinking Risk: Underwriting Uncovered - An Interview With Niamh Leonard

Before we take a break from the series and start to look at other functions within the insurance industry, I invited Niamh Leonard of Pen Underwriting to sit down for an interview to discuss the insurance industry and in particular the technology sector

I have worked with Niamh and the team at Pen on a wide variety of risks to ensure our mutual client has the correct cover that is tailored for their needs when transacting in the technology industry!

So let's get into it!

Firstly, how did you get into insurance?

My parents were very keen for me to go to university, I however, was not! ?I started applying for apprenticeships so I could show my parents a ‘viable alternative’ , which is the first time I started to consider a role in insurance. I joined Chaucer Syndicates?in 2019 as a School Leaver, having just completed the International Baccalaureate at Sixth Form. Here I completed my Insurance Practitioner Apprenticeship ,allowing me to study, whilst gaining my professional qualifications, then moving to a Specialist Cyber & Technology Market on completion. Whilst I am yet to get a degree, I am quite comfortable now that I have found a much more exciting ‘viable alternative’.

What made you decide you wanted to pursue a career in the Technology Insurance sector?

Having spent a few years servicing a number of business units, who were underwriting a wide range of risks, I became particularly interested in Technology & Cyber, particularly because it is an area of constant innovation and an industry that is rapidly evolving. It is a fast paced, exciting environment to work in.? Clients are highly aspirational and engaging, and are not only?striving for improvements in their chosen?sectors, but also driving new developments in Technology that are likely to impact us all in one way or another. ?

What advice would you give to anyone looking to start in the Technology Insurance field? ?

My advice to someone looking to start a career in the Technology Sector would be to start with building a strong foundational knowledge of Insurance: understanding how risks are assessed; what the claims looks like and how they are handled; how the pricing is evolved; and the implications of the words on the wording.

In order to move into a specialism like Technology, its really important to stay updated on emerging technologies and trends and understanding potential threats to the industry. There are lots of really easy ways to do this such as webinars which are often offered for free by Specialist Technology Law Firms, CII, as well as a number of industry specialists such as CISA,NSCS, who regularly post updates on LinkedIn. ?For me, spending time with specialists in the Technology insurance market is the most invaluable thing to do when starting a career in Tech, this can be as simple as finding a mentor within your company or attending networking events & joining forums. More generally, developments in Technology will never stand still, so nor can you, keep asking questions, be open to learn at all times and stay engaged

What are some of the opportunities and challenges in the Technology market you foresee over the next year? ?

For insurance the opportunities are great – as new technology needs new insurance solutions.? This I suppose is also one of the challenges – new technologies breed new exposures.? As an Underwriter assessing these risks it’s interesting to think what the implications of this tech going wrong are, and how they can or should be mitigated.?

There’s a lot of nervousness around AI and especially the ownership of IP and copyright infringement.? This will likely become a clearer picture as several meaningful law suits push to a conclusion.? So at some point we’ll have a bit more clarity around this.

What are some of the most exciting emerging technologies you are seeing?

It is so difficult to narrow down the most exciting emerging technologies with the developments in Sustainable energy, Extended Reality, Space Technology, Smart Transportation. Something which I was reading about recently ,is the new developments of Brain-Computer Interfaces, with two companies developing devices to allow people suffering from paralysis, to control computers using only their mind. Biotech/Gene Editing is also an incredibly interesting area of technology, that is working to eliminate certain genetic disorders and even has the potential (if successful) to extend human lifespan!

What advice would you give to a broker in conveying the importance of including Technology Insurance within an insurance programme to a client?

Aside from the obvious added protection there are a range of benefits to holding insurance as a Technology company, such as: assisting clients in securing new contracts; assisting clients in securing new funding and improving levels of customer trust (and how they come across). The main objections to adding PI are generally ‘we have never had a claim before’ or ‘it’s too expensive’. As companies scale-up, taking on larger clients, their exposure grows too, and their risk profile can alter signifcantlly. One uninsured claim has the potential to wipe-out years of growth and development, and in more extreme cases, wipe the business out entirely.

In respect of the cost of insurance, we are always working to provide the best value to customers, whilst providing bespoke solutions. ?Claims?in the Technology Sector can range from ￡50k-￡10M and beyond.? To put that into perspective, purchasing insurance would be a very small investment for long-term protection.

The simplest ways of conveying the importance of including Technology Insurance would be to use recent claims examples to illustrate the very real exposure any Technology company could face.

Why would a client want to choose a “Technology PI” policy over a “Standard or Miscellaneous PI” policy?

A technology policy has been carefully designed with the exposures of a Technology company in mind, such as: breach of Intellectual property, hosting downtime, efficacy and exposure to personal data. Whilst a miscellaneous PI policy is a more standard wording which will often not account for these exposures.

The primary and most important difference being that the majority of miscellaneous/standard wordings do not incorporate cover for breach of contract/contractual dispute cover, the most common basis of claim for a Technology Company.? There are a number of trades such as Surveyors, Solicitors and Financial Advisors that require specialized PI insurance, I would argue the same applies to Technology companies to ensure their exposure is managed appropriately.

Having a policy underwritten by a Technology Specialist also provides a huge benefit to the client, allowing their exposure to be fully understood, resulting in them buying a bespoke product that is tailored to their needs, at an appropriate premium with no potential problems of interpretation at the claim stage.

What are some of the key covers a client should look out for when purchasing a Technology policy? ?

There are a range of covers that are important to look out for when purchasing a Tech PI policy, the primary one being cover for Breach of contract. It is also important that the client considers coverage for intellectual property infringement, Personal Data/Privacy, Third-Party Insolvency, employee dishonesty/crime, coverage for work completed by subcontractors, and liquidated damages , all of which are often sublimited or excluded entirely by some policies.

At Pen it is really important to us to provide coverage to our clients that is comprehensive, fit-for-purpose and most importantly appropriate for their business needs. Having an eye for detail is essential when purchasing cover for a Technology company to ensure that the cover is not only providing value for money, but adding value to the client’s business.

What are some of the main sources of claims you see across Technology policies?

Speaking more generally about the main sources of claims we expect to see in the Tech PI space , these would be Software failures, cloud service outages, Contractual disputes, Intellectual Property and more recently Errors caused by Artificial Intelligence. Breach of contract claims are the most common basis of claim in the industry, when an insured fails to provide their products/services as agreed in contract, resulting in financial loss, thus resulting in a claim.

A wide range of SaaS providers specifically, utilise third party cloud-hosting services such as AWS and Azure, any downtime here is likely to disrupt the operation of their products for their users.

With the constant evolution of AI, ?claims in this area are likely to become more frequent, ultimately Artificial Intelligence is rules based, if it is given the wrong rules, it will provide the wrong answer.

Intellectual Property is something that more and more of our clients are becoming acutely aware of, as often their value is tied to proprietary products such as software, algorithms and hardware. IP claims are often costly to litigate and have the potential to result in serious reputational damage and financial loss, making coverage for these exposures essential for our clients.

What’s your thoughts on the “rise” and use of AI in Underwriting and Broking and what would this mean for Technology Insurance?

I think the adoption of AI in the insurance industry will provide great benefits such as reducing administrative load, (for often time consuming simple tasks) providing more comprehensive cover comparisons and improved visibility of trends/data. Ultimately, having a positive impact on the speed and efficiency of both brokers and insurers and providing even stronger service to our clients (something that we pride ourselves on at Pen and is highlighted by our teams 4.9/5 feefo score for service).

As a company, we are actively exploring processes than can be assisted and improved using AI, as well as integrated into our existing broker-facing systems to continue to improve customer journey. That being said, I do believe a lot of what we do as Underwriter’s/Brokers can’t be replaced, particularly as more and more insured’s want to discuss their exposures face-to-face and have a more ‘hands on’ approach to managing their insurance & exposures.? The reality is that whilst we are much further along than we have ever been in the developments of AI, there is still a long way to go.

And lastly my favourite question, what are your recommendations for lunch in the city?

Probably the most difficult question of them all, with so many amazing places to eat in the square mile! My favourite however would have to be Fazenda

Fantastic interview here with Niamh and I would like to thank her for her valuable time in providing some fantastic responses and some great insight into being an underwriter in the technology sector

I am likely to end the series on this fantastic note as we look to speak to other experts in different areas of the insurance industry, so stay on the look out for new editions of the newsletter in the coming weeks!

And as always Don’t forget to Insure With Grimshaw!

George Grimshaw

Senior Account Executive - Cyber & Technology

Jensten Insurance Brokers

07900598771

[email protected]

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