IT Industry of Ukraine: Is there a Call for Broader Insurance Coverage?
August 28, 2015
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Currently Ukraine’s IT industry stands among the top-5 fastest growing segments of the national economy and even ranks high up internationally for its growth rates. As of October 2015 the amount of foreign investments in this field accounted for over $ 2 bln with this number having promising prospects in future as well. Fairly enough, the majority of companies leading in this field are those partially owned by foreign entities or individuals which for the most part are used to covering possible risks associated with the companies’ operations by insurance policies.
Considering the fact that nature of IT companies operations implies employees being their principal assets, it is safe to say that the choice of insurance instruments applicable to IT industry of Ukraine is quite specific and somewhat limitedConsidering the fact that nature of IT companies operations implies employees being their principal assets, it is safe to say that the choice of insurance instruments applicable to industry of Ukraine is quite specific and somewhat limited. Let’s look at them more closely.
Property damage insurance. Contrary to the industrial or commercial facilities the offices of IT companies do not usually have a great number of movable or immovable assets to be insured from regular perils like fire, natural disasters or malicious mischief, for example. Ukraine’s IT industry offers an opportunity for a lot of companies to easily conduct their operations by hiring a certain number of professionals able to work from their homes. For those companies which nonetheless chose to set up regular offices, there are two types of policies which are the most relevant. They are standard property damage insurance (either “named perils” or “all risks”) available and general third-party liability insurance. However if the company’s operations depend on the uninterrupted service of pricy IT equipment such as servers, data centers etc. another type of insurance policy can be of use. This is a so called “EEI” (electronic equipment insurance) policy providing extensive coverage for risks associated with damage due to the electric energy, man factor, regular operations or faulty manufacturing process. The policy is the “all risks” one, securing indemnity for all the possible damages except for those excluded from the coverage. This kind of insurance is used quite rarely due to its high cost and relative complexity on the stage of risk assessment.
Health insurance. That is probably the very insurance that the majority of big and even medium companies can boast of in IT industry of Ukraine. Since there is a high demand for qualified professionals in this field the headhunters usually do their best to provide competitive benefits package for their employees. The programs vary greatly in the market, although the majority of them is not limited to the “basic” ones, but includes additional options such as dental care, coverage of critical diseases, periodic screenings, prenatal care or subscription to some of the gym activities etc.
Professional liability Insurance. This topic deserves special attention. With the rapid development of a number and complexity of IT projects, there has long ago appeared the need for professional or product liability insurance coverage. However, IT industry of Ukraine is not offered sufficient amount of insurance products to cover all possible risks arising from their nature of business. The truth is, though, that nowadays only 20 % of all the companies operating in the market and having insurance, have purchased it willingly, but not upon the requirements of investors or clients.
My strong belief is that the further advancement of Ukraine’s IT industry will eventually bring about the new developments in the related insurance products as well.
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