Insuring the Intangible
1 August 2023
For over 100 years we have insured material assets such as cargo and property but as the world changes, so do the risks and insurance has evolved as much as the world we live in.
When Harold Wilson insured chemist Jesse Boot’s first Rolls Royce, car insurance was pretty cutting edge – little did he know we’d still be at the forefront of emerging risks a century later.
We work with many corporate clients and even social influencers where their brand, intellectual property and data is far more valuable to them than tangible assets. No longer do companies measure their value purely in tangible assets, such as property, equipment and stock.
For some businesses the value of their intangible assets such as brand, reputation, intellectual property and data has overtaken the value of their physical assets. Certain reports show intangible assets accounting for 90% of portfolios amongst Standard & Poor’s 500 companies, compared to just 17% in 1975.
The digital revolution is a major factor in this shift, especially over the last two years as so many businesses moved their operations online during the pandemic. This may well have been part of their future plans, but the necessity of lockdown accelerated this move. Not only were these businesses able to respond to the needs of their UK customers during lockdown and expand their existing customer base, but it provided the opportunity to expand their businesses internationally.
However, moving a business online and the necessity of home working not only brought opportunity, but increased threat due to network vulnerabilities and the rise in cyber attacks, ransomware and phishing attempts. Many businesses that moved swiftly to take their businesses online simply didn’t have the technical skills or time to access the specialist support required to minimise their vulnerabilities or have the specific cyber cover to respond should they suffer a breach. These risks included the threat to their intangible assets such as reputation and brand.
Some businesses that have historically operated on a traditional business model may not even consider the value of their intangible assets such as brand, intellectual property and data – and in that case they certainly won’t have estimated the cost of replacing or redeveloping these assets.
Even for businesses that acknowledge these intangible assets, establishing their actual value can be a challenge too. If a business has bought an asset it’s simple, but something that’s been built and developed by your business over time is very different – and that value will change over time too.
As a broker we have experience of helping businesses review their insurance programme to ensure they have in place the insurance solutions that work for their unique business, which may have changes significantly over the last few years. We not only guide them through the design of their insurance programme to identify their tangible risks, but the intangible too such as protection against associated legal costs, loss of brand equity and the theft of intellectual property. And then we explain it all to you in plain English, so you know exactly what’s covered.