Vitaliy Lebedovskiy commented on the insurance products requested by IT companies in Ukraine and explained why this sphere of insurance coverage is not that popular in our country.
Despite enormous potential of the national IT market, insurance companies tend not to view this field as additional niche for development, making technological companies find the ways to cover their risks themselves.
If an IT project falls through, the aftermath can be catastrophic resulting in the loss of profit and, what is more important, loss of reputation which was earned by sweat of company’s brow. However each project is bound to have some kind of error due to the man factor. Besides, the complexity of developing technologies doubles the chances for mistakes. Program error can lead to the leak of client’s database or prevent the client from winning a tender for an attractive order. Online booking can also suffer from technological bugs. Such examples prove that risk management is crucial for all IT companies in Ukraine as well as worldwide.
It’s a common practice for IT companies to insure their risks. Insurance companies in the USA or in Europe offer their clients package deal approach for insuring medical technologies, telecommunications, system integration, electronics, software and IT solutions.
Vitaliy Lebedovskiy, senior account manager and partner at BritMark, considers the companies’ will to insure to directly depend on the presence of significant material assets. Having such assets is quite a rare case since they are not compulsory attributes of a successful IT company.
"If an IT company possesses some kind of valuable assets such as equipment, servers, data processing centers etc,, the loss of which would paralyze its operation, the company’s owner at least comprehends the importance of such assets being insured against fire, internal defects and similar perils” - says he.
"ІТ companies in the field of services can insure product liability to cover the quality of their services. Such insurance policy is designed to insure the client against law suits filed by company’s clients who have suffered losses due to the low quality services, - says Vitaliy. – If development of particular product (technology or software) constitutes the core of the company’s business, we can talk about the product liability insurance policy”.
Professional liability policy provides for indemnification of financial losses crucial for the Insured for the litigation cases as it allows the company to save business assets and cover legal expenses.
What is more, insurance products in the field of IT usually include coverage for data leaks implying indemnification for unbudgeted expenses associated with the leak. Insurance against cyber blackmailing provides coverage for the expenses related to it. Computer data liability insurance provides for indemnification in case of damage or loss of the insured data as well as failure to use, access or manage data due to the physical property damage.
Around 80 % of the IT companies in Ukraine buy insurance not willingly but to meet the requirements of their western partners/investors/contractors, says Vitaliy Lebedovskiy. In Europe and in the USA insuring IT business has long ago become a common practice. Unfortunately, our insurance market has neither demand nor supply of the insurance products for IT companies in Ukraine.