Law firms and their insurance clients are strange bedfellows. While insurers claim that their lawyers do not work quickly, efficiently and certainly not cheaply enough, lawyers argue that their clients do not understand the vagaries of handling a claim. It is therefore a market with raised eyebrows that monitors the progress of new technology risk insurer Click for Cover and its strategic partner Hammond Suddards Edge.
Click is an underwriting agency for a number of Lloyd’s of London syndicates. It provides policies for technology risks, which could come from outside the company (hackers) or internally (for example, potentially defamatory comments made during email correspondence or posted on websites).
Clients come from all industries where the technology behind the business poses a risk. Pure dotcoms are Click’s bread and butter, but as the infamous incident over comments made about a secretary at Charles Russell showed, no organisation is immune to the perils and pitfalls of email communication.
So how does Hammonds fit into the set-up? The firm’s former commercial insurance partner Michael Lent put the deal together and, following his departure, partner Stephen Reynolds and senior solicitor Lynne Atherton took over last week. Click started writing business at the beginning of 2000, but Hammonds has been in the thick of things since the nine-month period of market research prior to this, advising on policy wording and coverage issues. Taylor Joynson Garrett acted as corporate adviser in setting up the new insurance company.
Getting in on the ground is a decision that could prove propitious. Insurance industry estimates predict that, as a new class of business, technology risk insurance could be worth between $100m (£68.6m) and $600m (£411.9m). It is an immature class of business that is growing quickly. An insurance lawyer engaging in a spot of crystal ball gazing could have spotted that e-insurance was an area lacking in legal experts.
Hammonds, although well regarded for handling claims, is not synonymous with insurance work. It has leveraged its early interest in e-commerce, seized the initiative and, through this strategic partnership, should reap multiple rewards.
Click will initially refer matters to Hammonds. Having been involved with the company from the outset, Hammonds has a depth of knowledge about how the insurer operates that cannot be immediately replicated by a rival law firm. It is, at least temporarily, assured of a steady and increasing flow of claims work that will assist in developing its reputed strengths in e-issues. Click managing director David Walsh says that claims activity is brewing and that Hammonds used considerable foresight to take a punt on Click.
Hammonds will not, however, be gifted an exclusive arrangement with its clients. Walsh says that in five years time his company should be farming out claims work to a number of specialist firms. Click will eventually have a panel of legal advisers, but in the interim Hammonds will use the time to prove itself adept at handling issues thrown up by technology risks.
Atherton says the way to stay in this, and any, type of business is by looking to the future. She argues that by forming links with Click, Hammonds is able to monitor developments in an area that is changing constantly, build a knowledge base and generally forge ahead of its competitors. For the time being, critics will have to bite their lips – Click and Hammonds have a relationship that works and is beneficial for both parties.