Overview of the Tech industry

With numerous digital transformations emerging, the pace of innovation is only accelerating. Even over the past three years, 45% of IT executives and business have reported a significant push on the technological gas pedal. 

With no sign of a yellow light on the digital frontier, artificial intelligence trends are popping up all over large enterprises and entrepreneurial startups alike. Moving IT systems to the cloud, for example, is an initiative 60% of enterprises are expected to undertake in the near future. 

Unsurprisingly, it doesn’t stop there. Plenty more AI implementations are due to take place—over 30% more than in past years, in fact . Meaning, more devices will become connected, opening the door to identity and privacy protection being a top concern. 

It’s no secret that to get to the technology of tomorrow, certain foundational macro forces will make it happen—cyber, the business of technology, and core modernization. Ultimately, it’s all hands on deck for tech companies. 

Some of the biggest risks Tech companies face

Cybersecurity

High profile data breaches seem to be a constant in the news cycle. Growing from $1.2 million in 2016 to $1.3 million in 2017, the average cost of a cyber attack is ever-increasing. Unsurprisingly, tech companies are often the victims of cyber crime where hackers steal or destroy valuable data. Theft of PII can be particular damaging.

Legal & Regulatory

Plenty of sector leaders think that regulations have the potential to slow the growth of the industry. Navigating the complexity of regulatory requirements is a major risk for any Tech company. Often operations do not fit easily into preexisting regulatory regimes, especially if you want to scale internationally.

Product Collapse

When the service or digital product fails and causes financial loss, Tech Errors & Omissions is the first line of defense. Of the 55% of small businesses reporting at least one data breach in the past year, ½ of those experienced multiple breaches. This policy would respond should clients lose revenue, for example, after a breach of this nature.

Lawsuits

As fast as a modern tech company grows, exposures seem to grow at twice the rate. For this reason, it’s vital to protect current and past directors and officers from legal action claiming a mismanagement of the company. An average of 25% of companies face this level of D&O loss.

System Failures

By nature Tech companies are heavily reliant on back end & front end systems and third party services providers for their applications, servers and data services. Any outages, downtimes or failures can result in lawsuits from customers who rely on their platforms to run their business.

Data Breaches

Data breaches are when sensitive information is data is copied, transmitted, viewed, stolen or used by an individual unauthorized to do so. IBM study estimated that the average cost for companies who are victims of cyber attacks is a whopping $141 per record.

Why is Insurance for Teach Organizations Important?

Case studies in the news:

Google:
Running for nearly a decade, Google’s antitrust probes were the main aim of a $1.7 billion fine. The U.S. tech giant was called out for market abuse regarding the company’s popular software for Android phones and shopping-related searches. 

See: Google Fined $1.7 Billion Over Advertising Market Abuse

Apple:
From an “eavesdropping” Apple glitch to a secret Canadian sex toy scandal, Chicago-based attorney Jay Edelson has won his clients millions in class-action cases. His innovative approach targets tech companies who play fast and loose with consumer privacy.

See: Big Tech Vs. Small Privacy Lawsuits

Uber:
Philadelphia lawyers called upon Uber to open their books, setting their sights set on a slew of business operating audits. Filed by three drivers, this popular rideshare app faced three years-worth of various unpaid taxes. 

See: Philadelphia drivers’ lawsuit a risk t Uber as tech giant prepares to go public

Oracle:
Backed by a high degree of statistical evidence, Oracle endured scrutiny from over 4,200 female employees. The California-based tech company faced class-action complaints regarding sexual misconduct, uneven pay, and biased workplaces.

See: Oracle systematically underpaid thousands of women, lawsuit says

Yahoo:
Two different data breaches, possibly impacting all of Yahoo’s users, catapulted a securities class-action lawsuit. Additionally, shareholders filed numerous lawsuits against Yahoo’s board and senior managers which was later consolidated. 

See: Yahoo Data Breach-Related Derivative Suit Settled for $29 Million

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How much does Insurance for Technology Companies cost?

In the game of insurance underwriting, how premiums are determined is often a massive secret. Yet, there are a few upfront elements that influence the cost.

To begin with, your projected annual revenue will weight heavily on the rating. For young tech companies with an unknown forecast, insurance companies might rate your company based on the number of employees or location details. As it goes, these two factors will be thrown into the pot anyway.

Additionally, the service or product that you provide will also influence the number your premium settles on. Lastly, your claim history (if you have any) will undoubtedly reflect in that major underwriting decision.

Each policy type is rated differently and will vary in premium. We recently anlayzed our D&O Insurance policy database and examined avg. pricing by industry:

Types of Technology Companies that need insurance

Consider that within the next decade (probably less), the economic impact of Tech companies from around the globe will hit the trillions—making it impossible to circumvent risk exposure. No matter how big or small, young or old your digital innovations, all Tech companies need to be covered, including:

Software & App Developers

Artificial Intelligence (AI)

Software as a Service

Data & Analytics

Blockchain

IoT

Fintech

IT Services

Internet Service Providers

Data & Analytics

Cloud Technology

Hardware Manufacturers

Tech companies we work with

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