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Insurance Coverage Law
Cyber-Insurance Attacks And Policy Attacks
Cyberinsurance will face major challenges in 2023. Increased ransomware and other cyberattacks against the United States have pushed up cyberinsurance premium costs and will continue to do so. Additionally, cyberattacks arising from the Ukraine invasion or other sources will raise the question of coverage, as insurers consider using their policies’ war exclusion to deny coverage for attacks arising from an armed conflict, or simply write policies excluding state-sponsored cyberattacks from coverage.
The historic justification for war and hostile act exclusions in insurance, especially property insurance, go back to colonial America when policies were based on the British property insurance model. In 1752, when the greatest urban threat to high-density homes and businesses (all built with wood) was fire, Benjamin Franklin himself was involved in creating a Philadelphia insurance model based on a London firm10. To ensure solvency, exclusions for war, a common but unpredictable event, were common and enforced.
10 Andre Beattie, The History of Insurance in America, INVESTOPEDIA, note 40: https://www.investopedia.com/articles/ financial-theory/08/american-insurance.asp [https://perma.cc/6LAW-58U5] [hereinafter Beattie, History of Insurance] (last updated Dec. 11, 2019).
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FDCC ANNUAL FIVES 2023