War Exclusions Need To Evolve For Cyber Insurance To Be Effective (Insurance Business)

War Exclusions Need To Evolve For Cyber Insurance To Be Effective

  Tuesday, December 8th, 2020 Source: Insurance Business

Insurance can act as a key tool in addressing pervasive cybersecurity vulnerabilities, but, according to one report, “Cyber insurance is not yet mature enough to fulfill its potential, partly due to uncertainty about what kinds of cyber risks are, or can be, insured.”

In October, the Carnegie Endowment for International Peace released a report titled “War, Terrorism, and Catastrophe in Cyber Insurance: Understanding and Reforming Exclusions,” which discussed how war and terrorism exclusions create challenges for cyber claims, such as the NotPetya lawsuits involving Merck and Mondelez, and in turn stand in the way of the growth of the cyber insurance marketplace.

This issue, reads the report, came to a head in 2017, when the Russian government conducted the NotPetya cyberattack, which infected hundreds of organizations across dozens of countries. One of the insurance coverage disputes that arose after this event involved war exclusions.

Merck and Mondelez in particular sought to get claims for their NotPetya-related losses under their property and casualty policies, which were silent cyber coverage policies, and their insurers pushed back and invoked war and terrorism exclusions.

The challenges involved in relying on these exclusions are manifold, says one expert.

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