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As the UK tech sector booms, fuelled by AI advancements, expert brokers are vital for navigating complex risks and building partnerships that empower tech businesses to thrive in a dynamic landscape

THE UK’S technology sector has soared to new heights, reaching a remarkable market valuation of over $1 trillion in the first quarter of this year, reflecting its rapid expansion. This growth, however, is accompanied by unique challenges for tech firms, who face a myriad of risks. Whether it’s cybersecurity threats, regulatory changes or the growing reliance on digital infrastructure, which only increase as tech firms scale up, they require a nuanced approach to risk management. The stakes are high, and navigating these challenges calls for specialized expertise, creating valuable opportunities for tech brokers.

Markel is a leading specialist insurer, serving regional brokers and UK SMEs. We are proud to empower, support and protect over one million UK customers with specialist insurance, tax and legal solutions. We’re specialists and have provided sector-specific solutions for over 30 years. In that time, we’ve established a strong reputation for technical excellence, product innovation and service excellence to the broking community. Whether it’s access to 24/7 legal advice, tax and R&D support or a debt recovery service, we understand the day-to-day challenges facing our customers. We put people first because we believe in the power of relationships and doing what’s right.

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“Tech firms’ needs are incredibly complex and unlikely to be met by anything that can be easily self-served online. This is where the broker is so important; it is a complex advised sale”

Richard Brooks, Markel

“What often surprises me during discussions with our broker community is their response of, ‘We don’t have any tech customers.’ The real challenge lies in helping brokers understand that tech businesses are all around us.” Brooks continues, “Consequently, what we generally find is that a very high percentage of businesses Markel would identify as tech customers are on ordinary, commercial combined policies.” By failing to recognise these businesses as tech companies, brokers risk underinsurance, potentially leaving tech firms without the appropriate coverage for their needs. This is of particular concern considering the vast risk landscape that tech companies face, from data breaches to ransomware attacks, cloud security risks, social engineering and DDoS attacks. Tech companies tend to scale at a much faster pace than other businesses, meaning their risk exposure and requirements are constantly evolving. This is especially prevalent when tech firms have grown into larger businesses and are looking to set up overseas, leaving many brokers with the challenge of finding alternative cover for their clients. Reflecting on the growth opportunity for brokers, Brooks says, “There’s a huge opportunity here for brokers to build trusted relationships with their tech clients by supporting them every step of the growth curve. It makes sense to offer a modular product that can support their clients throughout each stage of their journey – including global expansion.” In response, Markel’s tech proposition has been built to support local entrepreneurs to global leaders, providing specialist advice and coverage across the UK and worldwide.

For example, a cloud computing provider might offer a range of services, including data storage, software hosting and infrastructure as a service (IaaS) to various clients, necessitating a complex array of coverages such as cyber liability, media liability, service provider liability, business interruption and intellectual property insurance. To ensure adequate protection, Brooks advises tech firms to seek out seasoned experts who know what risks to watch for and can provide ongoing support as their business needs evolve. “Tech firms’ needs are incredibly complex and unlikely to be met by anything that can be easily self-served online. This is where the broker is so important; it is a complex advised sale, and this remains the case throughout renewals as tech firms continue to grow at pace.” Beyond specialist insurance, tech firms need support with their growth objectives, something that brokers can both assist with and benefit from. “When a broker works with a startup tech firm, there’s every chance they will grow. It’s in their DNA, and if a broker can support them, build trust and a valued relationship, they can grow together,” states Brooks. In response and after detailed research with brokers and tech businesses, Markel has developed a suite of value-added benefits to help their tech customers at every stage in their growth journey realise their ambitions. Innovation and growth solutions include access to R&D tax relief, debt recovery, 24/7 business legal advice, contractor solutions and more.

Reflecting on Markel’s strengths, Montague notes that the firm has not only significantly enhanced its cybersecurity offerings – recently launching FintechRisk+ to provide improved cyber coverage and support for fintech firms – but has also prioritized developing strong interpersonal relationships with clients. “Markel has strong aspects to their offering, focusing on being advice-led and partnership-driven with clients. For me as a broker, having them in the room alleviates pressure as we navigate complexities together.” Montague continues, “If we give clients the wrong advice, it’s our professional exposure at stake. Markel’s support makes it easier to ensure we’re delivering what clients need.” Brooks adds that by providing tech firms with positive customer service experiences early on, brokers can increase client retention, allowing them to leverage cross-selling opportunities for additional essential covers and services as these companies scale throughout their lifecycle.

“Banks love to get their customers when they’re young. And I suppose our tech product is the same principle,” he says. “A tech firm’s immediate need may be something as simple as professional indemnity, but as they grow and start taking on staff and premises, there’s a point at which additional coverages are going to be necessary.”

Published Nov 4, 2024

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“Markel has strong aspects to their offering, focusing on being advice-led and partnership-driven with clients. For me as a broker, having them in the room alleviates pressure as we navigate complexities together”

Tom Montague, Howden Insurance

Brokers and tech firms: a vital connection

So how important is the relationship between brokers and tech firms in mitigating some of these risks? In short, very. As Brooks points out, one might assume that tech clients, being tech-savvy, could easily source coverage themselves online. However, the irony is that their needs are often far more complex than what can be navigated through a simple internet search. In the fast-paced world of technology, where threats emerge and evolve all the time, having flexible, scalable insurance cover tailored to the unique risks tech companies face is a must.

Customer service and cross-selling

With an astounding $20 billion raised by UK tech startups in 2023, it’s fair to say demand for specialist coverage will continue to skyrocket. Speaking on how brokers can prepare for this increasing demand, Tom Montague, sales director at Howden Insurance, highlights the importance of brand awareness and marketing. “It’s about really investing in that cybersecurity market so that policyholders know they’ve got a great product.” Montague’s point is crucial amid rising competition in the insurance space, as having the best offerings means little if no one knows about it or where to access it.

Seizing opportunities in the tech insurance market

Reflecting on the growth of the tech sector, Brooks says, “The fact that the UK tech sector is the number one ecosystem in Europe and the third most valuable in the world should tell brokers that they can create a real USP for themselves by becoming that person who understands tech, because it is all around us.”

On this, Montague notes that the best way to sell tech coverage to clients is to strike a balance between knowledge and the ability to break down complex concepts in an easily digestible manner. “There is a misconception that to be in this line of business brokers need to be computer whizzes and understand how to code. They don’t need to understand code – but do need to know how clients are using it and the risks it can present to their businesses.” “There really are so few specialists out there. Everybody is comfortable writing real estate and shops and things like that. Why not become more specialist? The tech market is underserved, and there really is a lot of growth opportunity here,” concludes Brooks.

Recognising the hidden tech landscape

Richard Brooks, broker development director at Markel, reveals a critical challenge before tailored strategies can be developed: ensuring tech businesses are recognised as tech companies first, and then encouraging them to seek specialised coverage.

The combined market valuation of the UK AI Sector in Q1 2024

$92bn

UK AI startups backed by VCs

of UK tech professionals say AI is having a positive impact on them personally today

1,800+

AI unicorns

UK tech companies are using AI to improve their existing product offering

1 in 2

UK tech in numbers

69%

16%

of total UK VC investment went to AI startups in Q1 2024

Source: https://technation.io/tech-nation-annual-report-pre-reg-2024/

UK tech in numbers

While other European markets saw a decline in AI investment in 2023, funding for UK AI increased.

UK France Germany Netherlands Spain Switzerland Turkey Ireland Sweden Denmark

$billions

Source: https://technation.io/tech-nation-annual-report-pre-reg-2024/