(Reuters) – Munich Re is planning new wordings in cyber insurance to rule out war, to avoid disputes over what is covered, the reinsurer’s leading cyber insurer told Reuters.
Russia’s invasion of Ukraine has raised fears of cyberattacks, with the risk that Western companies or government institutions could be targeted.
Most cyber policies cover companies against loss of business disruption and repair of hacked networks after a cyber attack but exclude war. Gray zones in the wording, however, leave insurance companies open to claims as a result of cyber war.
S&P Global said last week that insurance losses from the conflict in Ukraine could amount to $ 35 billion, with cyber one of the most vulnerable insurance classes.
Munich Re seeks clearer war exclusion clauses in cyber policy, based on wordings developed last year in the Lloyd̵7;s of London market.
The invasion of Ukraine is not a “classic cyber war”, says Jurgen Reinhart, chief guarantor of cyber at Munich Re, but he said it was best to be prepared.
“Let’s not wait … but act now,” he said.
Munich Re said last month that it was closing down its operations in Russia.
Munich Re is looking to introduce new formulations about its direct cyber insurance products, Reinhart said. The reinsurer also suggests to its cyber insurance customers that they introduce similar clauses.
Ambiguous wording in the business interruption policy has led to a series of lawsuits around the world over the past two years over whether the covid-19 pandemic was covered by insurance.
“We have learned this lesson as an industry when it comes to pandemics – how painful it is if you have unclear wording,” Reinhart said.
“Our intention is to have very, very clear wording … and to avoid surprises.”
Julia Graham, CEO of the British insurance buyers’ association Airmic, said that clarity was needed.
“There has been a lot of uncertainty among Airmic members about exclusions from war, especially for their cyber policy,” she said. “The lack of standardized cyber policy formulations in the market has certainly not helped matters.”