Date: Thursday, May 12th, 2022 by dev.login.
The latest edition of the annual Risk Radar Report from Global Insurance Law Connect (GILC) warns of the impact of the war in Ukraine, especially on cyber risks.
The report gives updates on political, regulatory and legal changes that will impact insurers in 23 countries, and the sections on France and Germany, authored by local law firms, highlight the issues around cyber insurance and exclusions in particular.
In Germany, while the immediate effects on the insurance industry are still considered manageable by the market, the war is expected to have a wide range of implications for the insurance industry, for example in regard to supply chain disruptions or cyber risks, says local law firm Arnecke Sibeth Dabelstein.
It points to the war exclusion contained in most cyber wordings, some of which also contain a special cyber war exclusion. “In the course of the Ukraine war and the cyber operations attributed to both Russia and Ukraine, the question of the applicability of the exclusion naturally arises. However, the insurance industry is very cautious in this respect, as it is aware that it would have to prove the applicability of the exclusion and thus, as a rule, the authorship of a state for a cyber operation,” says the law firm.
Dr Quirin Vergho, partner and head of the insurance practice group at Arnecke Sibeth Dabelstein, says: “Cyber war exclusion clauses will not be of great practical importance if insurers do not succeed in creating a recognised system for proving the authorship of a state for a cyber operation.”
In France, local law firm Byrd & Associates says the consequences of the war in Ukraine will certainly be one of the most important concerns in 2022 for French insurers, because of the high number of French companies operating in Ukraine.
“The first question that arises is whether their insurance policies cover the losses caused by the outbreak of war. The second, no less important, question related to the war in Ukraine concerns the insurance of cyberattacks. Indeed, following the economic sanctions against Russia, the risk of cyberattacks is very high, and cyber regulation will necessarily have to evolve,” states Byrd & Associates.
On the issue of cyber insurance, the law firm notes the increased risk of cyberattacks but says there is “an insurance gap relating to cyber risks, because insurers typically exclude acts of cyber warfare”, adding: “For this reason, the National Agency for Information Systems Security has published recommendations to prevent these threats, such as strengthening authentication on information systems.”
Robert Byrd, founding partner of Byrd & Associates, says: “The outbreak of the war in Ukraine should lead insurance companies to fill the insurance gap in the cyber sector, due to the increase in the risk of cyberattacks.”
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