We're sorry but your browser is not supported by Marsh.com.au

For the best experience, please upgrade to a supported browser:


Risk In Context

IT projects heading off schedule? How can your insurance help?

Posted by Lydia Alexandra 18 June 2019

The rapid pace of innovation presents numerous risks for IT organisations. While threats such as data sensitivity or product issues may be most pertinent to the industry, you may not realise that as an IT provider, you could also be liable for failing to execute services as expected by the client.

In fact, while we’ve all heard the phrase “failing to plan is planning to fail”, even with a well thought out execution strategy, projects can easily be sidetracked as a result of numerous unexpected factors. As IT practitioners race to meet deadlines and keep up with swift industry advancements, these factors can even be further exacerbated, creating costly exposures for those working on the project.

Whether it is design flaws, system issues, or a lack of communication between parties, unforeseen circumstances have significant impacts for both the client and the contractor. For example, an IT service provider was recently sued on the basis that the project did not meet outlined deadlines. The provider was contracted to design, manage and install a new IT platform for a large listed business and during the management and installation phase, the project went off-track, leading the client to sue the provider for costs associated with the delays, business interruption and implementation of fixes. The IT service provider was required to defend this matter, noting that many of these issues arose from the instructions given, as well as a lack of information provided by the client.

As you can imagine, while the client experienced a range of business interruption impairments and financial damages as a result of the project, the provider was exposed to significant legal costs, which could have had a substantial impact on their IT business going forward. 

Incidents like these can happen to anyone. Even with well spirited intentions, you could potentially find yourself needing to defend claims for the services you provided. In fact, this concern is ever more prominent in today’s society, with many reports detailing rising rates in litigation, resulting from enhanced customer expectations and rapidly changing environment.

Fortunately, for the IT industry, an Information Technology Liability policy can provide some protection and peace of mind in instances such as these. For example, in the case outlined above, an Information Technology Liability policy protected the provider, covering the  claims expenses and damages. Without such cover, IT organisations are less able to confidently participate in providing their services, due to numerous variables that are often not anticipated. The cover supports organisations financially through lawsuits, alleviating the pressure should allegations of this kind arise. 

For more information on Information Technology Liability or to arrange a quote, please get in contact with our specialised team at Marsh. 

Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) arrange insurance and are not an insurer. Any statements concerning legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as legal advice, for which you should consult your own professional advisors. This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy.  Marsh makes no representation or warranty concerning the application of policy wordings or the financial condition or solvency of insurers or re-insurers. Marsh makes no assurances regarding the availability, cost, or terms of insurance coverage.


Lydia Alexandra

Principal, VP – Financial and Professional Practice

Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.