10 “Why 27% of U.S. Firms Have No Plans to Buy Cyber Insurance,” Insurance Journal, May 31, 2017, https://www.insurancejournal.com/news/national/2017/05/31/452647.htm. The exclusion requires identifying the perpetrators, showing they acted as agents of a government, and characterizing the incident as “hostile or warlike.” This type of analysis can be difficult with cyber incidents for technical, analytical, and legal reasons discussed below. While attribution will be straightforward for some cyber insurance claims, in other cases it will be fuzzy and contested or not possible at all. Nevertheless, attribution is a cat-and-mouse game between two highly determined and adaptive groups (perpetrators and investigators). In particular, they might look to the intent of the perpetrator or the effects of a cyber incident. The public statements they do make sometimes lack detail, like the recent warning by the Federal Bureau of Investigation (FBI) that actors “affiliated” with the Chinese government were targeting coronavirus-related research data.65. Most policies have a … Intelligence analysts investigating malicious cyber incidents are well-versed in complicated proxy relationships. Meanwhile, the parties always have the option to settle privately—before, during, or even after a trial.116 Settlement might benefit both plaintiffs and defendants, but it would also defer a public reckoning of the legal issues at stake. These challenges to attribution can be overcome. 40 Adam Satariano and Nicole Perlroth, “Big Companies Thought Insurance Covered a Cyberattack. 58 Shari Seidman Diamond and Jessica M. Salerno, “Empirical Analysis of Juries in Tort Case,” in Research Handbook on the Economics of Torts, ed. The LMA5393, along with other subsequently issued clauses, excludes all communicable disease, and threat or fear of communicable disease. The cyber catastrophe exclusion discussed above has important advantages over today’s war exclusions. For these reasons, qualitative efforts to craft exclusion language could be paired with quantitative efforts to cap exposure (in dollar terms or the number of insurable events in a single year) and to attract new capital to help shoulder the risk. 14 Sasha Romanosky, Lillian Ablon, Andreas Kuehn, and Therese Jones, “Content Analysis of Cyber Insurance Policies: How Do Carriers Price Cyber Risk?,” Journal of Cybersecurity 5 (2019): https://academic.oup.com/cybersecurity/article/5/1/tyz002/5366419#131678466; and U.S. Cyber Solarium Commission, “Report,” March 2020, https://www.solarium.gov/report. [ ] Cyber, infrastructure and Data Protection Law. 147 Greenberg, “The Untold Story of NotPetya, the Most Devastating Cyberattack in History.”. Yet these threats are a primary rationale for purchasing cyber insurance, especially for large organizations. There are more frequent reports of state-sponsored cyber actors masquerading as other actors and taking other sophisticated measures to complicate attribution.140 Meanwhile, more governments are turning to shadowy proxy forces to make their actions more plausibly deniable. ENISA contributes to EU cyber policy, enhances the trustworthiness of ICT products, services and processes with cybersecurity certification schemes, cooperates with Member States and EU bodies, and helps Europe prepare … Global commercial insurance pricing increased 22% in the fourth quarter of 2020, according to Marsh's Global Insurance Market Index—2020 Q4. This book presents the latest trends in attacks and protection methods of Critical Infrastructures. Also sub-limits and time/distance limits may be lower than those provided by an all risks policy. Some are highly credible, while others have questionable or unknown practices.74 A single cyber incident could therefore lead to competing attributions by multiple governments and/or cybersecurity firms.75 One attribution may be much more sound than the others and convince the vast majority of credible experts. For cyber incidents, attribution is a complex topic often clouded by misunderstandings. These incentives have led to the pervasive use of cyber operations—initially by a small group of elite cyber powers like the United States and Russia, and now by scores of countries. Some definitions look to the intent behind a cyber incident (such as whether it is carried out “in the interest of a state”), and some look to the incident’s ultimate effects (certain types of government or business disruptions, or specified economic or political damage).164 Capsicum Re takes a more general approach, excluding cyber incidents that are “in connection with a state of war” or “part of, directly connected to, or in support of kinetic military action.”165 Courts would presumably develop more detailed rules for assessing connections between specific cyber incidents and military conflicts, perhaps by looking at intent or effects. Effective advocacy would, among other things, demonstrate how the industry had taken all reasonable steps within its power to develop the cyber insurance marketplace without government financial support. In some situations, however, coverage may not apply. Beyond attribution. Found inside – Page 144organizations such as the Critical Infrastructure Partnership Advisory Council (CIPAC) and its constituent bodies such as the Enduring ... or exclusion of such companies from information sharing regimes, can present trade implications. Implied risk tolerance. 2. ed vs Insured and Related Parties Entities Exclusions and the Implications for Professional Indemnity/Liability InsuranceInsur . NotPetya was not a battlefield action or synchronized at the tactical level with any Russian kinetic maneuvers. A better approach would begin with a new exclusion for catastrophic cyber risk, having nothing to do with war or state sponsorship. An exclusion specifically tailored for cyber catastrophes could help insurers and reinsurers manage the risk of extreme cyber events—whether malicious or nonmalicious, including those with physical triggers—more effectively than traditional war exclusions. Yet in the modern world, Hamas and other statelike entities like Hezbollah and the self-proclaimed Islamic State can amass significant military and cyber capabilities. Moreover, determining the perpetrators’ intent often depends on knowing their identity—one aspect of the attribution problem. They could always invest more in cyber defenses and resilience, of course. For the insurance industry, this emerging line of business represents a potentially large new market and source of long-term profits. If APT41 were found responsible for an insurable cyber incident, it would still remain to be determined whether that specific incident was state-directed. The regulator's document (Supervisory Statement | SS4/17) raised concerns around non-affirmative or "silent" cyber risk, that is, cyber risk that is not explicitly covered or excluded in the policy. 4 For an overview, see Ariel (Eli) Levite, Scott Kannry, and Wyatt Hoffman, “Addressing the Private Sector Cybersecurity Predicament: The Indispensable Role of Insurance,” Carnegie Endowment for International Peace, November 7, 2018, https://carnegieendowment.org/2018/11/07/addressing-private-sector-cybersecurity-predicament-indispensable-role-of-insurance-pub-77622. After all, cyber actions do not always reliably reveal intent. 90 Sasha Romanosky, “Examining the Costs and Causes of Cyber Incidents,” Journal of Cybersecurity 2 (2016): https://academic.oup.com/cybersecurity/article/2/2/121/2525524. Taken to extremes, this could be read to exclude every loss occurring during the current global pandemic. In between these two extremes is a murky middle ground that poses difficult line-drawing problems. C:\Program Files (x86)\Сommon Files\AcronisSchedule2\schedul2.exe Often, the financial repercussions were in the hundreds of millions of dollars. Healthcare is an especially notable example, as the sector faces a serious ransomware problem in the middle of a deadly pandemic. Different insurers and reinsurers will have different views on what qualifies as an uninsurable cyber catastrophe based on their unique risk appetites and varying estimates of cyber risk itself. Cyber and data Policy wording WD-PIP-UK-CD(3) 13388 08/18 ... infrastructure as a service or platform as a service. Thread needs solution . 190 National Oceanic and Atmospheric Administration (NOAA), “Billion-Dollar Weather and Climate Disasters: Events,” 2020, https://www.ncdc.noaa.gov/billions/events. Some insurers may take a principled position against covering any state-sponsored cyber incidents. Attribution in insurance litigation. Third, trial judgments could still be many months or even years away, and they would not be legally binding on other judges in future cases. This book offers a comprehensive overview of the international law applicable to cyber operations. Whether this activity is considered “hostile or warlike” may depend on whose intent counts. Such a clause would then be paired with a revised “war” exclusion, as described later. 193 Lee Mathews, “Louisiana Governor Declares State of Emergency After Ransomware Hits School Systems,” Forbes, July 26, 2019, https://www.forbes.com/sites/leemathews/2019/07/26/louisiana-governor-declares-state-of-emergency-after-ransomware-hits-school-systems/#7db991f9b37a; Benjamin Freed, “How Texas Used Its Disaster Playbook After a Huge Ransomware Attack,” StateScoop, October 15, 2019, https://statescoop.com/texas-ransomware-emergency-declaration-nascio-19/; and Kate Polit, “National Guard Called in to Help After SLG Cyber Attacks,” MeriTalk, August 29, 2019, https://www.meritalk.com/articles/national-guard-called-in-to-help-after-slg-cyber-attacks/. A faulty software update, for instance, could disable or damage millions of devices.107 Alternatively, a physical trigger like an earthquake could damage or disrupt computer equipment and cause cascading cyber-related consequences. But politically speaking, governments are already expected to serve as de facto backstops for major disasters. Despite years of international attempts to encourage restraint or impose deterrence, state-sponsored cyber operations have only grown in volume and severity. The UK’s National Cyber Security Centre says it is aware of a cyber attack spreading around the world amid fears of disruption to infrastructure including banking and transport. 57 “Charming Kitten,” MITRE ATT&CK, July 4, 2020, https://attack.mitre.org/groups/G0058/; and “APT 37,” MITRE ATT&CK, June 23, 2020, https://attack.mitre.org/groups/G0067/. Of course, what insureds view as an overly broad exclusion may look to insurers like prudent risk management. One key to addressing this comprehensively is to use … Moreover, there must be a clear termination condition that indicates when a conflict state, once begun for insurance purposes, would subsequently expire. losses from those causes may … PV policies operate on a named perils basis, so care needs to be taken to avoid any potential gaps between the all risks and PV policies. These wider objectives include fostering a sense of chaos and insecurity in the Western world, signaling Russia’s cyber capabilities for deterrence purposes, and forcing other powers to respect Russia’s interests and great power status by posturing as a spoiler.167. 68 Pan American World Airways Inc. v. Aetna Casualty and Surety Co., 505 F.2d 989 (2nd Cir. In short, Merck’s war and terrorism exclusions have a similar scope and raise similar problems when applied to cyber claims. However, this potential remains largely unrealized.7 The cyber insurance market is growing but still quite small compared to other insurance lines.8 Only a small fraction of cyber losses is currently insured.9 Part of the reason is that demand for cyber coverage remains limited. 9 Lloyd’s, Aon Centre for Innovation and Analytics, MSIG, SCOR TransRe, and Cyber Risk Management (CyRiM), “Bashe Attack: Global Infection by Contagious Malware,” January 2019, https://www.lloyds.com/~/media/files/news-and-insight/risk-insight/2019/cyrimbasheattack_final.pdf. A robust market for insuring cyber incidents could, among other things, financially incentivize organizations to adopt better cyber hygiene—thereby reducing cyber risk for society as a whole. They cite long-standing legal precedents—from noncyber cases—that limit war exclusions to insurance losses closely associated with kinetic military conflicts.80 U.S. courts, for instance, have ruled that actions against “civilian citizens of non-belligerent powers and their property at places far removed from the locale or the subject of any warfare” would not qualify as “warlike operations.”81 That is a good description of NotPetya, suggesting the war exclusions might not apply in such cases under this interpretation. Such improvements could help to chip away at pervasive cyber insecurity and thus provide economic, national security, and privacy benefits, among others. Cyber attribution depends on at least three factors: the quantity and quality of evidence available, the technical and analytical sophistication of investigators, and the credibility of the investigative process in the eyes of key audiences and decisionmakers. The exclusions in cyber insurance policies are as follows: The intellectual property insurance policy covers patents, software and copyright. A cyber policy does not cover these. In some cases, a cyber policy written in detail can cover defence cost copyright infringement claims. Of course, war exclusions were never designed to do any more than that. Development of this capability has been a crucial step on the long journey toward establishing greater accountability for state-sponsored cyber operations. Reinsurers, which specialize in understanding catastrophic and aggregated risks, will play a central role in assessing actuarial viability. Insurers are also uniquely positioned to understand risks at a systemic level—leveraging claims data and other proprietary information to identify emerging risk patterns and warn of systemic vulnerabilities that no individual client could see.6. Insurance will be a key tool for countries seeking to better address cyber risk. Cyber risk is a very real threat and should not be ignored or treated lightly in operational risk frameworks, as it has the potential to threaten the ongoing viability of an organisation. In other cases, seemingly ordinary data thefts could threaten a company’s reputation, competitiveness, or liquidity—perhaps well beyond what the perpetrator envisioned.88. Robust insurance markets are therefore beneficial to society at large, not just to insurers and insureds. (EDWA),” July 21, 2020, https://www.justice.gov/opa/speech/assistant-attorney-general-john-c-demers-remarks-press-conference-united-states-v-li-et. The market has, as a result, opted to further restrict the coverage they will provide. Moreover, insurance requires a sustainable long-term bargain between insurers and insureds (with governments, reinsurers, and other market players all exerting influence). It simply excludes all losses tied to computer systems inside a conflict zone.
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