The risk of cyberattacks has increased following Russia's invasion of Ukraine and may test the effectiveness of 'war exclusion' and 'hostile act exclusion' language in policies, says Fitch Ratings.
A new note from the agency says that the wording, already under greater scrutiny following a recent court ruling that found an insurer liable for losses stemming from the 2017 NotPetya malware attack, may be further tested by current events stemming from Russia's actions.
However, Fitch Ratings said that the work done around rising cyber claims in recent years should mitigate some underwriting losses.
Fitch Ratings wrote: 'The proliferation of potential cyberattacks from well-organized, state-sponsored hackers is elevated given the current conflict. Other P/C lines that may be affected include political risk and trade credit, property, marine, cargo, and aviation.'
It added: 'Increased ransomware events have caused elevated losses; cyber insurance companies have responded by increasing premiums and have required better cyber hygiene requirements for policyholders such as multifactor authentication. This should help mitigate potential losses from the current conflict, but cyber insurance will have to evolve in kind to keep pace with the drivers of losses.'
