professional indemnity insurers

Due to increasing ambiguity in cover between Professional Indemnity (PI) and Cyber Insurance policies, many insurers are now applying ‘Cyber and Data exclusion’ endorsements to PI policies. This may appear as though PI insurers are looking to restrict policy cover. however they are simply seeking to provide clarification.

Professional Indemnity Insurers Seek Clarification

Professional Indemnity Insurance provides cover for professional negligence. However, policy wordings tend not to factor in the cyber risks that have evolved over time. It is important to note that the PI Insurance marketplace, as a whole, never intended to include cover for cyber risks. For certain businesses, an element of cover may be provided by insurers. For example, where PI insurance cover is provided for the IT / Technology sector, separate endorsements may apply. Where IT services (particularly such as network security) forms part of an insured’s business activities, insurers are likely to take a different approach.

There has been increasing concern among insurers, and reinsurers, that Professional Indemnity (PI) policies overlap (sometimes significantly) with Cyber covers. It is important that PI insurers are clear as to the scope of policy cover they provide. Therefore, the International Underwriting Association in London has created a market standard clause which is now being applied to PI and Liability policies. This is to ensure that markets can continue to underwrite each of the associated covers. Also, providing a greater degree of risk separation clarity to policyholders.

The Cyber Exclusion Endorsement 

The PI version of the endorsement starts from the principle of ensuring that traditional PI exposures remain covered. At the same time, cover for claims more appropriately covered elsewhere are specifically excluded. Most commonly, these would fall under a stand-alone Cyber policy. It is important to stress that this is not intended to be an exclusion per se. Rather a clarification that these eventualities were never intended to be covered by a PI policy. There are two PI versions, for Tech and non-Tech policies. The Tech variant recognises that this might not be the case where IT services (particularly such as network security) are being provided, hence the different approach.

One of our PI Insurance providers, Air Underwriting, have produced a summary of the elements that make up the market standard clause.

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If you have any questions about PI Insurance cover and whether you need it, get in touch with us today. Insurance2day can help you with any queries you may have. Alternatively, if you enjoyed reading this blog, why not take a look at another one: PI Cover – Who Needs It?