The Hartford's new FailSafe product responds to the expanding professional liability exposures of technology companies
By John Maes
As vice president of The Hartford Financial Services Group, Laura Johnson heads Hartford Financial Products' technology unit.
The boom of cyberspace and e-commerce has opened up new opportunities for technology providers, but it has also exposed them to a new realm of liability risk.
Suppliers, many of them small business operators or self-employeds, have rushed in to fill the demand for consulting, software development, programming and network design services.
The nature of their risks is growing faster than tech companies may realize, says Laura Johnson, vice president of The Hartford Financial Services Group and head of Hartford Financial Products' technology unit in Kansas City, Missouri. "The way tech companies are exposed to risk is really changing," she says.
Any company that develops software will have copyright and trademark exposures, but more global venturing and partnering, or linking a Web site to others can accelerate a chain reaction of liability that can blindside a tech provider with legal trouble. Companies may be missing the boat by insuring only their property and general liability risks, while ignoring the E&O side of their business and vice versa, according to Johnson. "It seems the technology field definitely lacks an awareness of the risks they face."
Responding to the expanding professional liability needs of technology companies, The Hartford is rolling out an insurance product called FailSafe(TM).
FailSafe provides a suite of professional liability coverages developed for small and mid-sized technology suppliers, says Johnson.
FailSafe comes in three separate products, she explains. FailSafe Mega is aimed at start-ups, self-employeds or small shops of less than $5 million in annual revenues. Next is FailSafe Giga, a monoline E&O policy for small and middle-market operators, while FailSafe Tera is a "more robust" policy extending to other professional liability risks, not just E&O, according to Johnson.
FailSafe, she says, tries to address tech company insurance needs from every possible angle. "We can cover the spectrum of their needs from a third-party liability point of view. Some people might want to buy expanded content, security and invasion of privacy coverages or they might feel they need only E&O coverage. They might feel they can handle their other exposures for content and so forth in a different way other than insuring them," according to Johnson.
Julia Feldman is technology sector marketing strategist for The Hartford's small commercial business.
Agents figured prominently in getting the program off the ground and they will find ample sales opportunities in FailSafe, says Julia Feldman, technology sector marketing strategist for The Hartford's small commercial business in Hartford, Connecticut.
The Mega product has been included in The Hartford's Spectrum small business insurance program to address the specific E&O needs of technology companies, according to Feldman. Agents can submit applications electronically through The Hartford's Electronic Business Center (EBC) or via The Hartford's Single-Entry Multi-Carrier Interface, she says. And like other small commercial accounts, accounts with FailSafe can be serviced by the insurer's customer service center.
Bottom line? Agents will be able to cultivate new markets while significantly growing their books of small business accounts and not having to spend an inordinate amount of time doing it, says Feldman. Though FailSafe is new, The Hartford has incorporated it into a well-established delivery and service system that has worked well for many agents, she points out.
Feldman realizes that agents who don't deal in the tech company sector might be wary of it because of the complexity of the business. "The technology industry is a little different. It's not like insuring a shoe store where all the risks are much more straightforward and easier to understand," she says. "What we wanted to do with this initiative was to bring all the ease of doing business and our years of experience in handling small business to the technology sector."
With The Hartford's support, most agents will find they can navigate easily in the tech space in order to do business, Feldman says.
"It's like one-stop shopping for the agent," she says. "The agent can go into our automated rating system once, enter the information and the FailSafe application is integrated with the small business application. There are a few more additional questions to be answered, and they can get an errors and omissions quote at the same time as their BOP quote."
The Hartford's nationwide network of sales reps is available, many of them well enough versed in technology issues to be able to field questions and help agents deal with tech accounts. The Hartford's EBC will be supplemented with a technology Web site as an additional helping hand, explains Feldman. "The Web site will help agents get a good understanding of what we have to offer. They'll be able to see what some of the exposures are and what types of claims small technology accounts might come up against."
Johnson and Feldman point out that agents were involved in FailSafe even before it was on the drawing board. The Hartford conducted numerous focus groups and discussions with agents and tech companies. By doing so, The Hartford learned there was a need for more extensive coverages for tech firms as well as the desire to sell and purchase a full range of coverage from a single insurer. To close gaps in a tech provider's insurance program, agents would have to use multiple insurers and even then, gaps might still exist, Johnson explains. "The agents said it was hard for them to get all the coverages on the same policy form, taking into account the way tech firms do business. Agents wanted to be able to provide tech coverages with the same insurer that provides the general liability coverage," she says.
Not only does FailSafe plug the coverage gaps, but it will mature with the insured, says Johnson. The Hartford recognized that the tech field is full of start-up ventures that can grow so fast that they move from the founder's one-bedroom apartment to a suite of offices seemingly overnight. Other firms grow more slowly but the insurer must address the changing needs as they mature, she says. "FailSafe is designed to evolve with the companies. Companies can migrate from the different products and they can get more robust coverages as their needs change. Our products can evolve with the customers throughout their company's life cycle." *
The author
John Maes is a Chicago-area freelance writer.
FailSafe provides a suite of professional liability coverages developed for small and mid-sized technology suppliers, says Johnson.
FailSafe is developed for companies that provide such services as:
* Development, sales, installation, integration and/or maintenance of hardware, packaged and custom software
* Consulting services
* Systems outsourcing and facilities management and administration
* Application services/leasing
* E-commerce applications
FailSafe Mega, Giga and Tera are designed for companies that provide any of the above services.
Here's a closer look at the FailSafe suite of coverages.
FailSafe Mega is the small business E&O coverage marketed as part of the Spectrum insurance program. It insures:
* Negligent acts or errors and omissions
* Failure of technology services to perform as expected
* Consulting, design analysis, installation, training, maintenance, support, and repair of: software, wireless applications, firmware, shareware, networks, systems, hardware, devices or components
* Integration of systems
* Processing, managing, mining or warehousing of data
* Administration, management, operation, or hosting of another system, technology or computer facilities
* Manufacture, sale, licensing, distribution or marketing of: software, wireless applications, firmware, shareware, networks, systems, hardware, devices or components
* Design and development of code, software or programming
* Providing software application, services, rental or leasing
FailSafe Giga is the E&O coverage for small and mid-sized tech firms. It features the same coverages as Mega but also insures breach of warranties or representations, the technology company's Web services for others and has the ability to add other services not already included in the definition of technology services.
FailSafe Tera includes the same coverages as its companion products but also insures the following professional liability perils:
* Denial of service, unauthorized access or use, repudiation of access, tampering with or introduction of malicious code
* Infringement of copyright, title, slogan, trademark, trade name, trade dress, service market or service name
* Plagiarism or misappropriation of ideas
* Misuse of intellectual property right in content
* Libel, slander, product or service disparagement, trade libel, infliction of emotional distress, outrage or outrageous conduct
* False light, public disclosure of private facts, intrusion and commercial appropriation of name or likeness
* Wrongful entry or eviction, trespass, eavesdropping or other invasion of the right of private occupancy
* Malicious prosecution or false arrest, detention or imprisonment
In addition, FailSafe Tera not only covers Web services for others, but also the Web site activities of the technology company.
For more information:
Contact your local Hartford regional vice president, or Laura Johnson at (816) 714-0707 and Marcia Jenson at (816) 714-0717 or via e-mail at failsafe@thehartford.com.