Page 28 - Insurance Times August New 2023
P. 28

War exclusion and its


          implication on cyber



          attack claims


                                                                                              Suvajit Chandra
                                                                                               AO, Underwriting
                                                                                     United India Insurance Co Ltd,
                                                                                         Regional Office, Kolkata.




                                                       ABSTRACT
           War being a catastrophic event of unimaginable scale is generally kept as an exclusion in every property and
           casualty policy. However, with time the nature of warfare has also changed, and  traditional wording may not
           be adequate. The cyber attack called the NotPetya attack was launched in 2017 and after investigation, various
           governments put the responsibility for the attack on Russia and its military. It was seen as an extension of the
           ongoing  conflict  between  Ukraine and  Russia.  Two American corporations  - Merck &  Co.  and Mondolez
           International suffered significant damages due to the cyber attack and raised claims in their respective policies.
           The claims were initially denied on the ground of war exclusion. The Court granted the claims and concluded
           cyberattacks can't be termed as war. One of the significant impacts of the NotPetya-related events was Lloyd's
           changed its wording  for its cyber insurance.


                  xclusions in an insurance contract are specified  attributable (directly or indirectly) to a consequence of war,
         E        events whose operation or occurrence doesn't give  invasion, acts of foreign enemies, hostilities, civil war,
                                                              rebellion, revolution, insurrection, military, or usurped power.
                  rise to a claim when the said event proves to be
                  the proximate cause of any damage or loss. While
                                                              Both cyber insurance policies and all-risk property insurance
          the list of exclusions may vary from one policy to the other,
                                                              policies are no exception to this, and war exclusion can be
          and from one insurer to the other, one of the most common
                                                              found in any such policy. However, recent legal judgments
          and prevalent exclusion which is found in every property and
                                                              show that circumstances involving cyber attacks or cyber-
          casualty insurance policy is War Exclusion. Probably the only
                                                              warfare are unique, dynamic, and still under development
          exception to this norm is Marine policy and Aviation policy.
                                                              and existing wordings of war exclusions may not fully serve
                                                              the purpose.
          War is not covered in insurance because the scale of war
          can't be judged beforehand and damages ensuing from it
                                                              The judgments in the case involving pharmaceutical firm
          may well be beyond the cumulative capacity of all insurers
                                                              Merck and a separate case involving multinational food and
          and reinsurers. Also, it's believed that the war exclusion to
                                                              beverage company Mondelez International are a case in
          some extent may act as a deterrent to any conflict or
                                                              point.
          aggression and incentivizes peace efforts. If war is covered
          by insurance, not only it will no longer disincentivize conflicts
                                                              The attack:
          but may also encourage them.
                                                              The genesis of the cases is a cyber attack which is generally
          A typical war exclusion specifies that no loss is payable if it's  referred to as the Not Petya cyber attack. The attack was
            22     August 2023   The Insurance Times
   23   24   25   26   27   28   29   30   31   32   33