European technology, media and telecommunications (TMT) companies are failing to cover increasing risks adequately, despite the softening market, according to Marsh.
In its new report, "Managing liability in the technology, media and telecommunications sector", Marsh indicated the average TMT insurance was €53m, with the median at €36m, indicating a possible shortfall in insurance cover for middle-ranking firms.
Fredrik Motzfeldt, Marsh's European TMT leader, said: “Many companies are not taking advantage of the low price of limits, despite the new risks the sector is facing. The technology, media and telecommunication sectors are all converging, and previously unanticipated risks are beginning to materialise. In an era of convergence, it is prudent for firms to assess all their exposures on a rolling basis.”
Marsh also highlighted the increasing risks resulting from convergence across media sectors.
Motzfeldt said: “Customers are increasingly asking their suppliers to have professional indemnity insurance in place in case a virus is passed to them from a product or service. New electronic liability policies are not restricting coverage yet, but it may only take one successful litigation. An increased demand for cyber risk insurance cover and risk management services is likely in the next 12 months.”
He added: “Costs will need to be cut in some areas, such as components, which will create a higher vulnerability in the supply chain and possibly create a cyclical pattern in recalls. Cost cutting could create unsafe products causing a recall, which in turn elevates overheads and means greater pressure on cost cutting. The cost of recent recalls of overheating computer batteries and their effect on a company's stock price highlight just how great the risks can be.”
