ordinarily an insured peril in most hull & machinery policies. Conscious of this
potential effect of the clause on the cover when incorporating CL380 into the
contract, the market might be prepared to offer write-backs in some instances. For
example, the London market has developed a variation of the clause for the hull &
machinery market, known as “CL380 Hull amended”. After incorporating the above
mentioned cyber exclusion into the contract, this clause effectively writes back cover
for a range of traditional perils, such as perils of the seas, fire or explosion or
negligence of master, officer, crew or pilots, even in cases where computers,
software or related systems are directly or indirectly the cause of the physical loss
emerging.
4 Conclusions
It is virtually impossible to calculate the cost of cyber crime to businesses, but it is
predicted that it will cost $6 trillion globally by 2021.
35 The demand for cyber
insurance is increasing rapidly, and a modest estimate indicates that in 2018 the
insurance industry must have taken in more than $4 billion in premiums to underwrite insurance against cyber risks.
36 Most recent high-profile cyber attacks to
shipping companies and ports were a reminder to the sector of the magnitude of
financial losses that they can face even when a modest cyber attack is perpetrated.
Cyber risk insurance is a relatively new type of cover, and it is not an understatement to say that both insurers and assureds are on a stiff learning curve when it
comes to appreciating the extent of the cover. In the early days, most conventional
policies did not contain an express cyber exclusion clause, so in some instances
assureds befitted from non-affirmative (silent) cyber cover. However, this situation is
fast changing, and in most conventional policies (e.g., hull & machinery, energy and
cargo risks) insurers are making sure that cyber exclusions are incorporated into their
policies. The wording of the standard cyber exclusion clause (known as CL380) is
very broad and might act to the detriment of the assured, as illustrated with examples
in this paper. The author predicts that given the difficulties in defining the nature of
cyber risks, the insurers are unlikely to make any alteration in the wording of CL380,
but they will possibly offer write-backs depending on the type of policy in question.
This presents a good opportunity to assureds to negotiate a tailor-made policy
protecting them against cyber risks; but the main problem in the sector is that the
assureds are not yet fully appreciative of the extent of cyber exclusions and usually
not in a position to negotiate write-backs in an effective way.
35 https://cybersecurityventures.com/hackerpocalypse-cybercrime-report-2016/ (last tested on
31 December 2018).
36 This figure was $2.5 billion in 2014. See, http://fortune.com/2015/01/23/cyber-attack-insurancelloyds/ (last tested on 31 December 2018).
640
B. Soyer
potential effect of the clause on the cover when incorporating CL380 into the
contract, the market might be prepared to offer write-backs in some instances. For
example, the London market has developed a variation of the clause for the hull &
machinery market, known as “CL380 Hull amended”. After incorporating the above
mentioned cyber exclusion into the contract, this clause effectively writes back cover
for a range of traditional perils, such as perils of the seas, fire or explosion or
negligence of master, officer, crew or pilots, even in cases where computers,
software or related systems are directly or indirectly the cause of the physical loss
emerging.
4 Conclusions
It is virtually impossible to calculate the cost of cyber crime to businesses, but it is
predicted that it will cost $6 trillion globally by 2021.
35 The demand for cyber
insurance is increasing rapidly, and a modest estimate indicates that in 2018 the
insurance industry must have taken in more than $4 billion in premiums to underwrite insurance against cyber risks.
36 Most recent high-profile cyber attacks to
shipping companies and ports were a reminder to the sector of the magnitude of
financial losses that they can face even when a modest cyber attack is perpetrated.
Cyber risk insurance is a relatively new type of cover, and it is not an understatement to say that both insurers and assureds are on a stiff learning curve when it
comes to appreciating the extent of the cover. In the early days, most conventional
policies did not contain an express cyber exclusion clause, so in some instances
assureds befitted from non-affirmative (silent) cyber cover. However, this situation is
fast changing, and in most conventional policies (e.g., hull & machinery, energy and
cargo risks) insurers are making sure that cyber exclusions are incorporated into their
policies. The wording of the standard cyber exclusion clause (known as CL380) is
very broad and might act to the detriment of the assured, as illustrated with examples
in this paper. The author predicts that given the difficulties in defining the nature of
cyber risks, the insurers are unlikely to make any alteration in the wording of CL380,
but they will possibly offer write-backs depending on the type of policy in question.
This presents a good opportunity to assureds to negotiate a tailor-made policy
protecting them against cyber risks; but the main problem in the sector is that the
assureds are not yet fully appreciative of the extent of cyber exclusions and usually
not in a position to negotiate write-backs in an effective way.
35 https://cybersecurityventures.com/hackerpocalypse-cybercrime-report-2016/ (last tested on
31 December 2018).
36 This figure was $2.5 billion in 2014. See, http://fortune.com/2015/01/23/cyber-attack-insurancelloyds/ (last tested on 31 December 2018).
640
B. Soyer