CastleCops® - Over half of European insurance firms setting incorrect business premiums

webitpr writes "24th November 2005, LONDON – More than 50 per cent of European insurance companies appear to ignore the physical environment in which IT infrastructure is housed when setting premiums. Overlooking this fundamental factor means insurers may be setting premiums incorrectly for businesses that do not house their IT in resilient, purpose-built facilities. This oversight could allow companies to exploit this loophole when making claims, according to recent research conducted by Global Switch.

The research commissioned by Global Switch, a leading provider of purpose-built, high specification data centres, was conducted by Vanson Bourne, and questioned enterprises (with 1000 or more employees) across Europe about various elements of their business continuity plans, including aspects of their insurance and premiums. The results show the majority of insurers across Europe are unaware of the potential risks of housing critical IT infrastructure in an inadequate environment.

Only 48 per cent of UK businesses believed that the physical environment of their IT infrastructure was of importance to their insurer. This leaves a worrying 52 per cent of UK insurance firms either not contemplating this when setting premiums or simply not highlighting its importance to its customers.

The country discovered to be least likely to consider this risk when offering insurance or setting premiums was Spain with nearly 20 per cent of its insurers failing to take in to account the physical environment of IT infrastructure.

France was the only exception where it appears to be a standard component of any business insurance policy - a massive 74 per cent of French businesses were conscious that this was an important factor for insurers when setting their premiums.

Julian King, commercial director at Global Switch, said: “The increased dependency on IT has heightened the consequences of even the briefest business disruption which can result in organisations losing thousands of pounds per second in some cases.

“The actual environment in which IT infrastructure is housed is therefore a crucial element in mitigating this risk. However many businesses still choose to locate their IT equipment within their office building believing it to be secure. The reality is they are leaving their organisation open to potential downtime and consequent disruption of their critical business functions.”

With the stakes so high it is therefore vital for insurers to identify the main physical threats for a business such as power failure, fire, flooding and security breaches. King continued: “If the IT infrastructure isn’t housed in a purpose-built environment, then the insurers are leaving themselves wide-open to the associated business risks and potentially multiple claims.”

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