Negotiating insurance limits with enterprise clients

Joe Newbury
Advised Account Manager
30 January 2024
4 minute read

As a growing startup or scaleup, showcasing the benefits your tech can bring to enterprise clients can be an exciting prospect. You’re scaling, building out your company and putting your tech into the hands of those who might otherwise not benefit.

In the early stages of these partnerships, it can be easy to hit roadblocks, especially with your contractual obligations. It doesn’t matter how all-singing and dancing your tech is if you don’t have the insurance to back it up.

So, what do you do when you’re ready to start speaking to enterprise clients but you realise you need more cover? Let’s find out.

The enterprise ecosystem

Delivering tech solutions to large-scale organisations with specific and often complex requirements is your bread and butter. With their network of multi-layered decision-makers, each with high expectation levels and sometimes extended sales cycles, it’s important you’re well prepared from the get-go.

Effectively selling enterprise software requires planning, preparation and patience. You’ll need to understand each company’s unique needs and how to navigate them effectively.

One of the key things you’ll need to navigate is your insurance requirements in contracts. You’ll already have insurance in place, but enterprise companies — like most of us these days — are often highly risk-averse, with a myriad of processes and procedures in place to mitigate inherent tech risks.

Contractual insurance

Insurance is there to support in mitigating these risks — from breach of contract to negligence. It might feel like overkill, but it serves an important purpose for both you and your clients. Without these clauses and coverage, should the worst happen, you could be liable for significant compensation costs or litigation.

When considering entering into a contract with an enterprise client, firstly, it’s important to weigh up the long-term cost. Is the benefit of pursuing this opportunity worth sacrificing lost revenue from other, smaller contacts?

The cost of your insurance to meet the needs of the contract will need to be considered when deciding the overall profitability of the opportunity ahead of you.

If your insurance requirements are higher than the revenue projections, it may not be a valuable enough option to pursue. But if the projected revenue outstrips the insurance costs, it’s likely a more worthwhile opportunity.

The insurance policies you might need in place will vary from contract to contract, but you’ll probably need cyber insurance, tech liability and professional indemnity as a minimum. The limits you’ll need for each policy will also likely vary.

Anecdotally, government frameworks require £10m limits of professional indemnity and cyber insurance. If you’re providing critical, client-facing software to tier-one banks, for example, you’ll likely be required to have £10m limits as a minimum.

Contracts with enterprise clients will state the specific policies and limits required to do business with them. Sometimes these will feel unsuitable for the size and complexity of your organisation or offering — in cases like this, negotiation is key.

Having the right coverage in place before going out to market with your tech is best practice, but sometimes that can be impractical. It’s the classic chicken/egg scenario.

But by working with your insurance broker when you’re in your planning phase, could make your option look all the more favourable in a tender process in your initial conversations with an enterprise organisation.

Negotiation station

You don’t want to be overpaying for insurance that doesn’t reflect the level of risk either party is being exposed to. If you notice that enterprise clients need higher limits — or cover that you feel is unrequired for the software you’re providing — how can you negotiate these down?

The first step would be to review the contract in detail to understand the requirements laid out and highlight any cover you’d like to negotiate.

Once you’ve done this, speak with your insurance broker. Your broking team will have a deep understanding of your business, as well as what cover you’ll require to ensure you and your enterprise client aren’t unduly exposed to specific risks.

Brokers will see gaps in coverage and can identify potential risks you — or your client — may not have considered. They also understand the real risk points that you may face and advise where is appropriate to negotiate the contract.

Brokers will also see overlap, and understand that unnecessary coverage will provide either of you with no real benefit, so their expert opinion can help with your contract negotiations.

By bringing your broker on board during your negotiations, you’ll be supported in providing rational and logical arguments as to the positions you’re taking on the limits in negotiation. This should provide a level of trust and competence with your client, hopefully, increasing the chance of a favourable outcome.

How Superscript can help

At Superscript, our dedicated team of expert tech brokers are well-versed in enterprise contact negotiations. They understand the market and prioritise your business to secure optimum terms.

Negotiating contract terms with enterprise clients can be overwhelming, but having a team on your side — who knows your business inside out — can help you smooth out the snags and navigate those roadblocks. Reach out to our team today, to learn more.

This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer.

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