By: Mr. Bassam Chilmeran
“The global technical failure on July 19th has caused significant repercussions for the insurance sector, particularly concerning claims related to business interruption, data recovery, and cyber liability.
The insurance sector is bracing for a wave of claims related to business interruption, data loss, and cyber liability, underscoring the need for robust risk management and diverse technological strategies. Companies experiencing downtime may file claims for lost revenue due to halted operations, and expenses related to data recovery and system restoration could lead to substantial claims.
The incident highlighted vulnerabilities in cybersecurity, potentially increasing cyber liability claims and leading to breaches of service level agreements due to service outages.
A standard cyber insurance policy includes several relevant coverages that may address claims arising from this event. The policy covers technology/professional errors and omissions, addressing damages and claim expenses resulting from wrongful acts, which may apply to operational disruptions due to service outages and related expenses.
Security and privacy liability covers damages and claim expenses arising from wrongful acts related to security and privacy, likely applicable to data breaches or privacy violations due to service disruptions.
Business income and digital asset restoration cover the loss of business income during the recovery period following a network outage and the costs of restoring digital assets affected by a security breach, directly related to claims for lost revenue and data recovery expenses due to service outages.
The policy covers expenses and payments related to cyber extortion threats, which, while not directly applicable to this incident, may cover any related online extortion threats arising from the disruption. It also covers breach response, reimbursing crisis management and breach response costs in the event of a security breach, covering costs associated with managing the fallout from the security incident caused by the service outage.
As we deal with the aftermath of this technical failure, it is important for companies to reassess their reliance on individual technology providers and consider more diverse approaches to risk mitigation.
In this context, the technical failure is expected to prompt significant discussions and potentially regulatory reviews to enhance the resilience of our digital infrastructure against such disruptions in the future.”
Bassam Chilmeran , Chairman of the Technical Committee of the Gulf Insurance Federation, Based in Riyadh August 7th 2024. As reported by Alwatan.
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