The majority of respondents to a recent Reinsurance News poll believe the total re/insurance industry loss from the CrowdStrike-linked IT outage will surpass $1 billion, with 38% of voters anticipating that losses could exceed $1.5 billion.
According to our poll, which compiled votes from a range of individuals within the re/insurance sector, 24% of the remaining respondents believe losses will fall between $1 billion and $1.5 billion, while 27% anticipate losses of $500 million to $1 billion, and 10% predict losses below $500 million.
For those who need refreshing, the outage was caused by the security company CrowdStrike, which sent out a corrupted software update to its huge number of customers. As per Microsoft, CrowdStrike’s update reportedly affected 8.5 million Windows devices.
Initial insured loss estimates have now been issued for the global IT outage, although their scope differs greatly.
Parametrix is estimating insured losses of between $540 million to $1.5 billion for US Fortune 500 companies (excluding Microsoft), CyberCube has released a range of $400 million to $1.5 billion for just the standalone cyber insurance market, and Coalition is expecting insured losses of $960 million for US cyber writers alone.
Joshua Motta, CEO and Co-founder of Coalition went on to note that he does not expect any to reach the levels of loss of natural catastrophe events that routinely impact the insurance industry.
Motta continued, “Our own modelling, leveraging our Active Cyber Risk Model, suggests a $0.96 billion industry-wide loss experienced by US cyber insurance policyholders at the upper bound prior to consideration of coverage limitations.
“Of course, any model of this event will also be highly sensitive to the least credible assumption (most likely, the share of impacted systems), which if reduced, would decrease our estimate to $0.27 billion (or lower).”
Meanwhile, a recent report from Moody’s has highlighted that cyber insurance losses related to the outage will be driven by business interruption. The firm also warned that determining final losses for the industry will be a lengthy process due to cyber insurance policy language not being standardised.
At the same time, as covered by our sister publication Artemis, Property Claim Services (PCS), the unit of Verisk that is a provider of industry loss estimates and loss data globally, has designated the global IT outage as a PCS Cyber Catastrophe Loss Event, meaning industry insured losses are expected to reach above $250 million.
As Reinsurance News understands, the varying estimates and the sensitivity of models to key assumptions reflect the evolving nature of cyber risk assessment.
As such, final loss determinations are expected to be protracted due to the non-standardised language of cyber insurance policies. Stay tuned to Reinsurance News for ongoing updates and in-depth analysis as more details about this significant event unravel.
.jfif)
0 Comments