Priya Patel
TLDR:
Analysts predict that business interruption claims will drive insured losses from the recent Microsoft IT outage. The outage, caused by a security update from CrowdStrike, impacted various sectors globally. While the overall impact is still being assessed, experts believe this event could be a litmus test for cyber underwriters like Beazley. Analysts at Goldman Sachs and RBC Capital Markets expect business interruption to be the main source of insured losses. This incident highlights the need for better risk assessment in the cyber insurance market.
Article Summary:
Following a significant Microsoft Cloud outage caused by a security update from CrowdStrike, analysts anticipate that business interruption claims will be the primary focus of insured losses. The outage, one of the largest-ever IT outages, affected various industries worldwide, including airlines, hospitals, and financial services. While the full impact is still unknown, experts warn of potential cyber accumulation risks and business interruption losses.
Analysts at Goldman Sachs and RBC Capital Markets highlight the importance of understanding the cause and duration of the IT outage in assessing potential business interruption claims. While CrowdStrike has ruled out a cyber attack as the cause, the event serves as a reminder of the challenges in underwriting cyber risks without historical data and advanced modelling.
The cyber insurance market, which has seen expansion in recent years, may face a significant test in handling the aftermath of this IT outage. Analysts question whether this event could be a litmus test for companies like Beazley, a large cyber writer. The market’s ability to underwrite cyber risks effectively and respond to large-scale incidents remains under scrutiny.
Analysts at Goldman Sachs and RBC Capital Markets believe that if the IT outage does not pose a capital risk to Beazley, it could serve as a reassurance of the company’s cyber underwriting efficacy. Despite the ongoing nature of the event, experts emphasize the need for better risk assessment and mitigation strategies in the cyber insurance market.
