March 2, 2010 by Canadian Underwriter
There is growing interest in buying standalone intellectual property insurance, Lloyd’s of London says.
“There’s huge demand out there from customers,” David Rees, vice president of the financial and professional risks practice at Marsh, tells lloyds.com. “In fact, there’s more demand than there is market capacity at the moment.”
Intellectual property insurance coverage pays for the legal fees of a policyholder that sues another company for stealing one of its ideas or tarnishing one of its brands.
The insurance market notes that companies can get some limited coverage for legal actions arising out of intellectual property disputes under their D&O or professional indemnity policies. Even so, more companies are inquiring about standalone insurance for protecting their intellectual property.
“That’s because in a global economy, where innovation can be the difference between success and failure, there are an increasing number of bitter wrangles between firms over who came up with a money-spinning idea,” the insurance market says on its Web site.
“Every firm insures their physical property, but not everyone insures their intellectual property,” Rees says. “But for many firms their intellectual property is their unique selling point — it’s what they make their money from.”
Lloyd’s notes such disputes can be “eye-wateringly expensive,” with costs spiralling to millions of dollars before the case has even reached a courtroom.
“Companies as diverse as software firms, pharmaceutical companies, medical device manufacturers and toy makers have approached this niche insurance market…for cover,” lloyds.com says.