Munich Re tightens up cyber insurance policies to exclude war -Breaking
Carolyn Cohn, Noor Zainab Rasain
LONDON, (Reuters) – Munich Re plans to change the wordings of its cyber insurance policies in order to exclude war and avoid any disputes about what is covered. This was disclosed by Munich Re’s cyber chief underwriter to Reuters.
Russia’s invasion of Ukraine raised concerns about cyber-attacks, and there is the possibility that Western governments or businesses could be at risk.
Cyber policies typically cover businesses against losses due to cyber attacks and repair of compromised networks. However, they do not include war. Cyber war is a possibility for insurers to make claims due to grey areas in their wordings.
S&P Global (NYSE:) said last week that insurance losses from the Ukraine conflict could total $35 billion, with cyber one of the classes of insurance most exposed.
Munich Re seeks clearer exclusions for war in its cyber policies. This is based upon wording that was developed in London’s Lloyd’s market last year.
Although the invasion of Ukraine wasn’t a classic cyberwar, Juergen Reinhart at Munich Re said that it was advisable to prepare for such an event.
“Let’s act immediately, not wait!”
Munich Re stated last month that it would be closing down its Russian business.
AIG (NYSE -), one of the most important commercial insurers in the world is looking at cutting coverage for Russia or Ukraine, Reuters reported Friday.
Reinhart stated that Munich Re wanted to introduce new words on its cyber-insurance products. It also recommended to cyber-insurer clients, Reinhart said.
In the last two years, a series of cases have been filed in court around the globe involving ambiguous business interruption policies. The issue was whether insurance covered the COVID-19 pandemic.
“We have learnt this lesson as an industry in respect of the pandemic – how painful it is if you have unclear wordings,” said Reinhart.
“Our goal is to avoid any surprise and have clear words.”
Julia Graham (NYSE – Chief Executive of UK Insurance Buyers’ Association Airmic) stated that clarity was necessary.
Airmic members have been in a state of flux regarding war exclusions, particularly their cyber policies,” she stated.
“It has not been helped by the lack of standardised policies on cyber market.”