Client Litigation Sinking Many IT Contractors, Research Reveals

by Robin Pilgrim, LawAndTax-News.com, London

15 September 2003

Research recently conducted by specialist insurance firm, Hiscox has revealed that claims against UK IT contractors have increased in both size and frequency over the last four years, with the consequence that many small consultancies are being forced out of business.

According to Hiscox, professional indemnity claims made by IT experts since 1999 have increased by more than 40%, suggesting that clients are becoming less forgiving of mistakes. The insurer went on to reveal that in May of this year alone, it handled claims which represented a combined sum of around £5 million.

Reporting on the research results, IT news service, The Register revealed that reasons given for recent claims included the accidental loss of client data, the supply of software which infringed on a rival organisation's intellectual property rights, and failure to properly integrate a new system.

Speaking to The Register, Hiscox product expert, Sam Franks suggested that:

'Clients are becoming more litigious, (and) with technology playing such a critical part in the day to day running of businesses they are no longer willing to let mistakes go and bear the cost themselves.'

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