Broker Bulletin

Intellectual Property Insurance – what is it and why clients need it.
You’ve heard about IPI, but how do you position it with your clients? How does it fit their business? Is it relevant? You need some good reasons to consider and promote it.

Well…here they are….

• IP is everywhere!

Follow the data. The modern business model is changing fast. Traditional businesses with obviously insurable tangible risks such as premises, stock, plant and machinery are declining. The new businesses of today are lean on physical assets with short leases, month-to-month licences (even ‘pop-up’ premises) and place heavy reliance on technology, e-commerce, on-line e-trading platforms and social media-led marketing strategies. Brokers simply must keep up.

In the 1980’s, studies showed big businesses had over 80% of their asset value in tangibles. Fast-forward 30 years and we have a complete reversal with over 80% of their value now in intangible assets – predominantly IP-related assets such as brand, reputation, design, IT code and unique know-how.

It would be a big mistake to assume SME’s are any different. A 2014 study by leading accountants concluded, on average, 75% of a SME’s assets are intangible and that figure keeps on growing.

IP is now so often the real value in a business. Brokers need to tune into these facts, recognise the risk to their client’s business of IP loss or infringement and recommend protection where needed.

• IPI – a product for today protecting the future.

Commendably, Brokers have been quick to adapt to selling abstract covers. Not so long ago, D&O, commercial legal expenses and cyber cover were novel classes of insurance. Today they are regarded by many as sensible ‘business hygiene’ protection. The emerging market of IPI is no different and yet, arguably, is more important than these now mature markets. Bluntly, if IP infringement goes unchecked, it can kill your client’s business and, with it, your future relationship.

• A risk like any other

Protecting creative ideas, brand, designs and know-how through IPI and registrations is no different to protecting a physical asset. If your place of work burns down, it will disrupt the business. If your IT systems collapse, continuity of your business is compromised. If your brand, design, or good reputation is ‘ripped-off’ by an infringer, you will lose customers fast and your business may even collapse. In all these cases, the prudent business is the insured business.

• Attracting investment

Any broker client looking for growth will inevitably need to secure financial investment. Think TV’s ‘Dragons Den’. How often is a great idea cast aside with a dismissive “I’m out!” by a Dragon because the creative founder has failed to secure a patent or other IP rights? IPI is a vital component of any IP protection. Dragons and business Angels know this, brokers should too.

• Equality of arms

SME’s are particularly vulnerable to failing in law suits due to the ‘law of deep pockets’. It doesn’t matter how good your claim or defence is, if you’re armed with a sling-shot and face an aggressive Goliath with a magic-circle law firm on the payroll. IP lawyers are specialist and expensive. IP law suits can be evidence-heavy and time-consuming. IPI cover smooths these disadvantages and takes away the distracting pain of an IP lawsuit. IPI de-risks the chance of being caught in expensive litigation for the survival of a business. Often, it is at its most effective early in the claims cycle by forcing abandonment of a ‘try-on’ claim against the insured or sensible early compromise. All of which allows the client business to keep its focus.

• Recognising business value

The very process of acknowledging and recognising the IP in a business allows it to better understand its true value. Knowing where its IP lies and protecting it, has the typical advantage of leveraging best price at the point of sale. It says to a buyer, ‘we know what makes us unique and attractive to you, we’ve identified it, protected it and we can guarantee what we sell to you is ours to sell and for that comfort you will pay a bit more’.

Having been convinced by the above reasons to consider IPI, here at Opus, we aim to make broking this class of business as easy as possible.

BIBA members can access our BIBA IPS 1000 product and non-members Opus 100. Both designed to deliver competitively priced intellectual property insurance to companies with products, brands and know-how to protect from predators and infringers.

Summary of key features:

• Comprehensive and reliable cover
• A quote and buy IPI portal offering instant quotes and documentation
• Access to ‘landscape’ analytics to carry out IP due diligence and licensing checks for clients
• Fast and efficient referral system for non-standard quotes
• Specialist lawyers/solicitors in the event of a claim
• Underwriting and broker support from specialist and dedicated Opus team

Murray Fairclough
Development Underwriter
Opus underwriting Ltd.
For more information please contact Opus:
Tel: +44 (0) 203 920 9985
Email: underwriting@opusunderwriting.com