Software-as-a-service (SaaS), what is it and what risks do these companies face?

SaaS is a software licencing and delivery model in which software is licensed on a subscription model. It is a modern industry with no signs of fading any time soon. Today’s world revolves around this cloud-based system.

SaaS companies can benefit from steady subscription-based revenue and low overheads. However, the picture isn’t perfect. When the systems are down, everything comes to a grinding halt, particularly for unprepared businesses.

Companies offering SaaS to customers need their service to be reliable, speedy and effective as advertised but service outages can come out of nowhere. For businesses large and small it is easy to see how that service downtime/cyber-attacks can trigger frustrating business interruption. If the service fails, whether from distributed denial-of service, cyber extortion attacks or an attack of a critical vendor, clients can quickly lose money. SaaS companies will bear the brunt of the price from lost income or dealing with legal disputes.

When it comes to protection, I would suggest the following insurance coverage:

Professional Indemnity

This covers you for when fingers get pointed and you are alleged to have been negligent in your capacity as a professional. It covers claims made against you due to alleged contractual failings causing your client to lose money. Some key examples of what it would cover are as follows:

• Failure to meet contractual obligations
• IP infringement 
• Loss of documents or data
• Breach of professional duty
• Failure to meet service delivery standards

Cyber Insurance

This covers you from financial loss that could be caused as a result of a malicious cyber-attack or data breach. It will help provide you with the support you need to stay above water. Some key examples of cover are as follows:

•  First Party (Investigation, recovery of data, restoring systems, extortion payments)
• Third party (Damages and settlements to third parties, legal defence for claims of GDPR breaches

General Liabilities

These are traditional liability covers and protect the day to day running of the business. This would include Public Liability and Employers Liability.

•  Public Liability covers you against third party property damage or injury as a result of your day to day running of the business.
• Employers Liability is a mandatory insurance for any business with 1 or more directors and covers damages and compensation costs as a result of injury or illness of an employee working for the business.

Directors and Officers insurance

This provides financial protection to the company’s directors and board members against civil liabilities, regulatory proceedings and criminal allegations. Individuals that hold these roles within a business can be held personally liable whilst making decisions on behalf of the company.

If you are a SaaS company and don’t hold one or more of these cover or have a renewal expiring soon,  feel free to get in touch for a free no obligation quote.

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