IUA commissions cyber war and policy wording research

The London market is set to carry out analysis of cyber warfare, how it affects insurance and whether policy wordings are up to scratch. But there are currently no plans to change standard or model war exclusions. The International Underwriting Association (IUA) told CRE it plans research into cyber conflicts, including cyber warfare, in the context of insurance. The proposed study being scoped out with IUA members would most likely explore the concept and definitions of cyber war and other forms of conflict, explained Chris Jones, director of legal and market services at the IUA. It could also look at how various insurance coverages and policy wordings might respond to such attacks. “We may also carry out some analysis of clauses in the context of cyber war and look at policy wordings and exclusionary language,” said Mr Jones. The research comes in the wake of several high-profile coverage disputes and cyberattacks linked to nation states. US food manufacturer Mondelez is suing Zurich Insurance after it used a war exclusion to deny a claim made on an-all risk property policy for losses related to the 2017 NotPetya cyberattack. Pharmaceutical company Merck is also in dispute after its property insurers used a war clause to deny cover for the NotPetya cyberattack, which the US Government blames on Russia. There are several other claims for NotPetya in arbitration. “There is increased potential for cyber warfare and cyber risk in general and there is recognition of the need for further analysis of what cyber warfare is and how it can be managed, and whether policy wordings are fit for purpose. There is work to be done on this topic, both in terms of awareness and education, as well as the policy approach,” said Mr Jones. “Cyber war is a new risk that people are trying to get to grips with and take a view on the frequency, legal concepts and policy language. Attribution of cyberattacks is challenging and there are questions around what is an act of war in the cyber context, or just espionage or some other state-sponsored activity. There is also a wider issue about targeted attacks vs flooded or contagious attacks like NotPetya,” he added. Cyber warfare is beginning to be discussed in the London market, however it is still early days and there are no plans to draft specific wordings, said Mr Jones. “It may be that there is potential for model clauses and this could be considered in consultation with the market, but this has not happened yet. We are not at that level of discussion,” he said. “While there are no moves at an association level, individual insurers will most likely be considering their approach to the issue, and we will be looking to see how that develops,” Mr Jones added. Insurers will have to consider what cyber means in the context of war, said Mr Jones. He noted that exclusions in P&C policies are mostly drafted with physical attacks and more traditional state-based actions in mind. “The current language may open up issues when proving that exclusions bite,” he said. “Insurers are not saying that war clauses are not fit for purpose. That has not come through in market discussions. However, cyber warfare is an emerging and increasing risk, and is something that drafters of insurance clauses need to be cognisant of,” added Mr Jones. In other news, the Association of British Insurers (ABI) said it simply does not recognise flaws in cyber policies raised by Mactavish, and has challenged the company to share proof of any problems. The association believes Mactavish has “fundamentally misinterpreted” how cyber insurance works in its analysis of market offerings.

IUA commissions cyber war and policy wording research

Want to read this article?

Read Next

Munich Re reorganises P&C underwriting in Asia Pacific, Middle East & Africa

Claims likely to increase as vessels remain stranded in Baltimore

Climate change to cause ‘massive economic damage’

Two-paced upstream energy market falls in favour of buyers

Energy insurer Paratus launches brokerage division

Munich Re reorganises P&C underwriting in Asia Pacific, Middle East & Africa

Claims likely to increase as vessels remain stranded in Baltimore

Climate change to cause ‘massive economic damage’

Two-paced upstream energy market falls in favour of buyers

Energy insurer Paratus launches brokerage division

Want to read this article?

Read Next

Munich Re reorganises P&C underwriting in Asia Pacific, Middle East & Africa

Claims likely to increase as vessels remain stranded in Baltimore

Climate change to cause ‘massive economic damage’

Two-paced upstream energy market falls in favour of buyers

Energy insurer Paratus launches brokerage division

Related Articles