PracticeConsultingInsurance claims on the up

Insurance claims on the up

IT contractors in the UK are significantly more likely to be sued by clients, with professional indemnity claims surging more than 40% in the past four years.

Smaller consultants are increasingly at risk with the size and frequency of claims rising substantially, according to a new study conducted by specialist indemnity insurer Hiscox.

In May alone, the insurer handled claims with a combined value of almost £5m.

Claims included accidentally wiping a client’s data, supplying software that infringed someone else’s intellectual property rights, failing to integrate a new system and delivering a system that did not meet the client’s brief.

Underwriter Sam Franks said the situation would only get worse as UK plc gets increasingly litigious and as companies’ reliance on IT systems increase.

‘Companies are far less willing to let mistakes go. It’s a general movement in the way business is being conducted. There is a risk that companies will sue first and try to sort out problems later,’ Franks added.

According to Hiscox, of the 50,000 or so IT contractors in the UK, approximately two thirds have professional indemnity insurance.

Aidan Lawes, chief executive of the IT Service Management Forum, said the survey highlighted the need for greater professionalism across the IT sector and called for the British Computer Society to take the lead.

‘We are making progress, but it’s still painfully slow and we will have to address it even more aggressively in the future otherwise the horror stories of IT failures won’t go away, and IT litigation will go up. And that’s not in anyone’s benefit.’

David Roberts, chief executive of Corporate IT Forum, said: ‘The more pressure there is to complete a project for a lower price, the more likely it is that errors will creep in.

‘IT as a profession is still very immature. We’d like to see the development of some sort of yardstick that can be put against people within IT to say they meet a certain standard. The image of IT as a quality profession does not exist,’ Roberts added.

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