Internet transactions give rise to new form of worldwide liability

Cyber-liability is a serious issue for businesses using new technologies, according to an insurance brokerage report published yesterday.

Internet transactions can give rise to worldwide liabilities, says Coyle Hamilton's Commentary 2000.

The annual report, which addresses major trends in insurance and pensions, warns that cyber-liability cases are already a reality.

In Britain last year, Norwich Union was forced to pay £450,000 to competitor Western Provident Association (WPA) when it lost an e-mail libel case. The court found that a Norwich Union employee defamed WPA in an internal e-mail.

The case highlights the risks companies take with e-commerce, yet few companies consider covering their Internet liabilities with insurance, says the report.

Activities that many businesses take for granted - posting information on websites, engaging in e-commerce, sending e-mails or joining online discussion groups - may expose them to massive potential liability says Coyle Hamilton.

The most common use of the Internet is e-mail and this easily represents the greatest cyber-risk to most companies.

E-mail is difficult to police and, without your knowledge, your employees can defame colleagues, customers, suppliers and competitors, writes Coyle Hamilton director of corporate broking, Mr John Bissett.

Inaccurate website data, or a failure to provide updated accurate information, can lead to claims for financial loss due to incorrect advice, he said.

Customers' credit card numbers and other confidential information can be misused or stolen, and companies may face prosecution and heavy fines under the Data Protection Act if negligence can be proven.

The insurance broker is planning to introduce Netsure, a cyber-liability insurance product next week.

Another issue gaining prominence in the Irish insurance sector is the rehabilitation of injured employees.

This employer-assisted approach aims to bring the employee back to work as soon as possible and may reduce employers' claim liabilities, says the commentary.

The most significant change in pensions and employee benefits in the 1990s has been the swing toward member choice, says managing director Mr Kieran Kelly. This reflects changes in the workforce and pensions' structure and approach.

Employers have followed an international trend and moved away from defined benefit towards defined contribution schemes. A pensions solution for part-time employees may also be addressed in the forthcoming Finance Bill, according to Coyle Hamilton.