Insurers Move to Expand Scope of War Exclusions

Risk Management Magazine

PUBLISHED ON: November 23, 2022

The cyber insurance product market is more expensive and tighter than ever. Cyberattacks nearly doubled year-over-year in 2021, according to NCC Group. Insurance companies responded: Cyber insurance policy premiums increased by 110% in the first quarter of 2022, according to the Marsh Global Insurance Market Index. Those increases have not dampened demand. Marc Schein, a Marsh risk management consultant, told Axios in September that clients are still purchasing cyber insurance plans despite increasing cost. As of the second quarter of 2022, Marsh reported that for the first time, more than 50% of its clients purchased cyber insurance.

Compounding the challenges for policyholders seeking adequate cyber cover, Lloyd’s is now attempting to broaden the scope of the traditional war exclusion as it pertains to cyberattacks. In Bulletin Y5381, released on August 16, 2022, Lloyd’s set out requirements that standalone cyber policies include “a suitable clause excluding liability for losses arising from any state backed cyber-attack” in addition to any war exclusion already included in the applicable policy.  

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Dylan LaMorte is an attorney in Anderson Kill’s Philadelphia office and a member of the firm’s insurance recovery group.

Joshua Gold is a shareholder in Anderson Kill’s New York office, chair of Anderson Kill’s cyber insurance recovery group and co-chair of the firm’s marine cargo industry group. He is co-author with Daniel J. Healy of Cyber Insurance Claims, Case Law, and Risk Management, forthcoming from the Practicing Law Institute.