Check out this special blog about the Crowdstrike incident from our friend Jack Compton at SGP Advisors.
The CrowdStrike incident on Friday, July 19th, disrupted a range of industries, and more were affected by the outage. CrowdStrike said over the weekend that a bad sensor configuration update in its cybersecurity platform caused the massive global computer outage. Within 24 hours, the issue appeared to be resolved, but it could have a ripple effect on the cyber insurance market.
Market Insight:
As with any event, carriers are grappling to understand the full extent of the issue and how it may impact their books.
One domestic underwriter stated: “The details of this outage are still being figured out, but as of now, this appears to be covered under Operational or Administrative Error. I’m HIGHLY skeptical that this will harden the market. If CDK and Clear didn’t already do that, this will not. Especially since CrowdStrike got the fix fairly quickly.”
A Lloyds underwriter was more pessimistic about the situation: “The business income losses from this event should be covered in most policies. Insureds should look for coverage under Business Interruption or Dependent Business Interruption insuring agreements. If the insured uses Crowdstrike directly, this outage would likely trigger the Business Interruption insuring agreement. If the insured uses a third-party service provider to conduct its daily operations, and that service provider is impacted by this outage, the insured should be covered under the Dependent Business Interruption insuring agreement. This event highlights the systemic risk for every business across the economy. It doesn’t matter how little technology you use or how strong your cyber controls are. Businesses are increasingly exposed to major interruptions caused by third parties. At the very least, this will most likely force carriers to reconsider pricing and limit deployments for business interruption and dependent business interruption coverages.”
We could see capacity become harder to obtain and premiums rise. Now is the time to secure cyber insurance. Don’t hesitate to reach out to our AdvoCap Insurance Agency, Inc. team with any questions.
Photo Credit: 123rf.com, fizkes
