Russia-Ukraine conflict: Exclusion clauses and limits expected to shield re/insurers from cyber claims

Whilst the recent tightening of economic sanctions on Russia could trigger retaliatory cyber warfare and drive up claims, European and North American re/insurers are anticipated to be shielded from large volumes of claims due to exclusion clauses, reductions in limits, and product diversification, according to forecasts from DBRS Morningstar.

Although acts of war are typically excluded from cyber insurance policies, attribution remains a key challenge as most cyber warfare is typically not acknowledged by belligerent state actors.

War exclusions in insurance policies have been updated in the past three years, although insurers and reinsurers are still trying to find a balance between the right coverage and managing accumulation risk.

“Although acts of war (declared or not) are typically excluded from cyber insurance policies, in DBRS Morningstar’s view, the current conflict could potentially increase cyber-related insurance and reinsurance claims in Europe and North America, as attribution can be very difficult to determine in cyber incidents,” said Marcos Alvarez, senior vice-president and head of insurance. “Nevertheless, we expect that insurers and reinsurers will continue to clarify their cyber war exclusions to face the new realities of state-sponsored cyber attacks.”

The Russia/Ukraine conflict has already increased the number of cyber incidents, but they mostly remain unsophisticated distributed denial-of-service attacks.

Image courtesy Goran Nastic

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