The insurance industry needs to move forward and simplify intellectual property (IP) coverage for the small- and medium-sized enterprise (SME) market, a specialist insurance provider said.
IP insurance typically involves long, complicated proposal forms, a fee charged to get a proper quotation, and a lot of legwork and time, said Maddi Brown, intellectual property practice leader with London, U.K.-based managing general agent CFC Underwriting. What’s worse is that sometimes a client will pay the fee, but the underwriter will still ultimately decline the risk, Brown said.
“Can you imagine the frustration if you’ve paid out 1,000 pounds and then you still don’t get terms at the end?” Brown said Thursday in an interview with Canadian Underwriter. “And it puts brokers off IP insurance, because it’s a voluntary class of insurance.
“I’ve been doing this for 15 years and it’s a fact that it’s always been complicated,” she added. “That’s where we’re focusing on is simplifying everything all the way through from quote to bind, which should be a simple process like any other insurance line. You can simplify that process when you work in the SME market.”
At CFC, they have removed the fee and use data analytics to help streamline the process. “We have a lot of resources, which means that we can now actually indicate based off website and revenue alone, subject then to the form,” Brown said. “And that really helped us open up the market and open up the space and allow clients and brokers to access the coverage in a much easier and simplistic manner.”
It’s a process that used to take a week or longer, but can now be done within 24-48 hours, Brown said.
“Quite typically, the information is on their website,” Brown said of SMEs. “And the revenue information just provides that additional requirement. The risk is quite different when we get the large corporates because they might have subsidiaries and other things that are not on their main website.”
There may also be litigation for large corporations. “So, there’s loads of complex aspects to their risks… [that] do need to be reviewed and assessed in order to provide terms for them. And if you move down to the SMEs, you don’t get that complexity.”
However, if CFC sees from its own data research that a company has large claims, it may be more cautious and contact the broker first. As well, if there are indemnity clauses within contracts with third parties related to protecting IP in the event of infringement, for example, CFC will look closer at the contracts to see if there is anything uninsurable within that contract.
IP coverage is essentially an infringement liability policy, Brown explained. “I always say that about the IP product: it’s a liability policy, just with IP attached to it.”
This coverage helps businesses defend themselves against claims of IP infringement, and can help businesses pursue those who are infringing on patents, copyrights or trademarks. In CFC’s case, there is also coverage for contractual indemnities, loss of IP rights and loss of profit.