Digital Risk Exclusions Fuel Demand for
press release &
London, UK - 18th February 2002, 1430 GMT - Business customers suffering
from uninsured digital risks will increasingly opt for specialist digital
risk insurance products in 2002. As of January this year, reinsurance companies
around the world have now specifically excluded data and other digital liabilities
from their cover, along with terrorism. This follows warnings and announcements
made in 2001.
In turn, global corporate insurers have decided to exclude data from policies
to protect themselves from ruinous losses. Most businesses are unaware that
digital risk exposure is in many cases no longer covered by the standard set
of insurance policies, such as business interruption, workers’ compensation,
property and liability.
“Many insurers would argue that they never intended
to provide cyber cover and that the exclusionary language is purely to clarify
the original intent. When these policies were originally issued, data was
not part of physical property, and viruses and hacking were not issues,” said
David Ovenden, Group Underwriting and Claims, Royal & SunAlliance. David Ovenden
is also Chairman of the Digital Risk Working Party of the International Underwriting
Since 1998, mi2g and global insurance houses have been collaborating to
define the new digital risk exposures, disruptive technologies and model correctly
priced risk management solutions. “Substantial
take-up of digital risk insurance is expected in 2002 and beyond, as the new
digital exclusions and their ramifications become better understood by insurance
buyers and sellers,” said DK Matai, Chairman and CEO, mi2g.
“WTC created massive data traffic losses for
business interruption insurers. A modern corporate runs the risk of trading
without having effective business interruption or disaster cover in place.
Shareholders will not accept that risk; neither should the board,” said
Steve Reynolds, Commercial Insurance Partner, Hammond Suddards Edge, the leading
law firm, with offices at Lloyd’s of London.
US and UK digital legislation has tightened against hackers who penetrate
online computer systems, and such malevolent activity, if motivated by political
or ideological belief, is now treated as terrorism. This has fundamental impact
on the wording of insurance policies. The events of 11th September have further
hardened the insurance industry’s stance on tightly coupled complex risk exposures,
which can lead to mega-loss scenarios.
“Cyber risk is the ‘soft underbelly’ of many
corporate businesses. When cyber terrorism is moving to a new level, companies
need to check that their insurance covers them fully for all types of digital
attack as the outfall could prove far more damaging than any cyber terrorist
may have intended,” said Trevor Moss, Executive Director, Alexander
Forbes, the Lloyd’s of London broker and global risk management group.
Notes to Editors
mi2g Digital Solutions Engineering pays particular regard to security.
mi2g advises on the management of eRisk and incorporates Bespoke Security
Architecture in its SMART sourcing solutions.
mi2g builds highly secure intranets and extranets, digital communities
and data warehouses that are specifically constructed for data mining, customer
relationship management and enhancing the network effect. For further information
What is Bespoke Security Architecture?
Bespoke Security Architecture brings together firewall layers, intrusion
detection and other defensive structures, as well as automated intelligence
techniques with legal, human resource and company policies.
What is Digital Risk Management?
Digital Risk Management deals with a variety of issues associated with implementing
digital solutions and integrating Service Level Management. It includes selecting
the optimum technology set, managing external partners and alliances, linking
payments to targets, defining rigorous quality control procedures, managing
the growth in online traffic post launch, achieving the expected return on
investment, and bringing about the changes in the corporate culture required
for successful eBusiness.
For additional information please contact - Intelligence
Telephone: +44 (0) 20 7924 3010 - Facsimile: +44 (0) 20
7924 3310 - eMail: Intelligence