Technology company liability difficult to insure

Anyone who supplies technology, any FHI company, does not know in advance which liability claims may come their way. Usually you operate in a chain and your product is 'enabling' within a specific application or system. If you supply a 3-D printed skull implant to a hospital or a surgeon and unexpectedly something goes wrong with the patient, make sure that you do not receive such a claim for damages that your high-tech company, which was just started a few years ago, does not finally collapse.

It was the situation of Maikel Beerens, founder and CEO of Xilloc Medical. He is a model for all almost eight hundred companies affiliated with the FHI branches. More than twenty years ago, FHI concluded that this problem requires a joint approach and that developing and maintaining such an approach is in line with the principle of solidarity from which the federation of technology industries derives its raison d'être. At the time, FHI selected the HBR industry insurance company as a partner to make the best propositions available to members in the insurance world and to support members individually with advice and possible procedures. This goes further than just liability insurance, but because these types of risks are so specific to the technology sectors and because such risks are generally very difficult to include in collective insurance, we will therefore pay attention to this here and now through a conversation. with Maikel Beerens, member of the FHI Medical Technology sector and with Ruud Rooker, commercial manager of HBR Sector Insurance. The third party in the conversation is the company Markel International, an insurer specialized in 'business liability and technical insurance'. Eelco de Jong and Gerben van Dijk, respectively director of liability and senior underwriter liability & engineering at Markel, are the discussion partners.

Why is it so difficult to take out collective liability insurance?

“The risks are difficult to estimate due to the enormous variety of companies, products and applications,” begins Ruud Rooker. “That makes it difficult for insurance companies, with which we have to conclude contracts, to estimate their risk. Most don't think at the specialized level of FHI.”

Why did Markel ultimately succeed in concluding a collective contract and offering a suitable product?

Markel appears to be a fairly new party in the Netherlands. The internationally operating insurer would like to gain a foothold here and is in any case a niche-oriented company. “We like customization,” says Eelco de Jong and Ruud Rooker has already introduced him as one of the people he has known for some time and whose attitude fits in with the culture of FHI companies. “We first look at what the company to be insured does, we look into the individual situation, but do not immediately attach an individual cost to it. We also visit smaller companies first to get to know them better without charging consultancy fees.” Gerben van Dijk adds to De Jong: “We look at how we can help and not look for reasons to reject an appeal to the collectivity. Together with HBR we try to understand the risks and that goes beyond just looking at the website and brochure material.”

Maikel Beerens is an expert by experience. “When I started my company in 2011, it was difficult to take out liability insurance with good coverage and still affordable. This was achieved through FHI/HBR Industry Insurance. Because we supply custom-made implants to hospitals, one of the questions is to what extent you can insure yourself in the event that an implant placed in a body unexpectedly shows defects. The doctor is responsible for the placement and operation of the product, but if the product itself is not good, Xilloc is responsible. You quickly get into a David versus Goliath situation when you get the legal department of a hospital after you.” “That is why we are strict up front when assessing the company to be insured. We look at how the technology supplier limits its risks in advance. We would rather have that than place additional risk on him that no payment will be made.” It is Eelco's argument. “Society is becoming increasingly claim-conscious. For example, in the case of injuries, we previously saw that employees simply returned to work after a period in the hospital. Nowadays, a claim for personal injury is increasingly being submitted to the employer first.”

What are the things that you pay attention to before you admit a party to the collective and conclude an insurance contract?

“We initially check whether the delivery conditions are in order. Applying the correct delivery conditions is the responsibility of the company. Make sure that you are properly advised by a lawyer or legal expert when drawing up the conditions,” is how Ruud Rooker begins his description of the acceptance process. Within FHI that is not that difficult. You simply take the FHI standard delivery terms and conditions. As an industry member you have the right to use these and refer to them. If something specific is needed, there are FHI lawyers who can advise based on practical experience within the federation. “We then check with Markel whether the quality assurance of the product and process is in order. We then provide the correct insurance clauses that match the delivery conditions.” Gerben van Dijk: “We experience in practice that the conditions for acceptance among FHI members are generally in good order.”

Conclusion? Adequate liability insurance for technology companies is not trivial, sometimes even difficult. But it is possible, thanks to the collectivity, expertise and attitude of the partners that FHI has selected and manages from the agency, in the person of Andreas Meijer. He is also the man who is approachable with suggestions for improvements, even for unexpected complaints.