Risk & Business Magazine Spectrum Insurance Spring 2017 | Page 7

CYBER RISK COVERAGE
compromised. In that situation, daily
business operations would continue
unhindered, but there might be a loss of
customers and revenue resulting from
security concerns. On one hand, the
network attack took place and the loss of
network security is driving away customers;
the insured is likely to contend that
network security is an intrinsic service that
it provides to customers.
On the other hand, relying on traditional
concepts of BI coverage, there would be no
complete or even partial suspension of the
insured’s network operations.
The loss of revenue would be based on
customers’ decisions, and thus the causal
connection of what is being insured —
suspension/ interruption of operations — is
not tied to the loss of revenue. Additionally,
if the customer no longer wants the
insured’s services, that may also be a “loss
of market” situation, which is normally
excluded in BI policies.
THERE ARE
COUNTLESS
CYBER ATTACK
SITUATIONS THAT
CAN ARISE.
Therefore, when a cyber attack claim is
presented and adjusted, the policy wording
and what constitutes the triggering event,
as well as the causal relationship of the
network attack to the revenue loss, must
be examined closely. At times, it may be a
challenge to correlate which incurred costs
are associated with the covered event versus
noncovered costs, such as a permanent
upgrade to network security. Adding to the
complexity of analyzing a cyber BI claim
is the insurer’s reliance on the insured’s
cooperation on openly sharing what exactly
took place in its system from the attack and
how these compromised systems tie into its
operations and revenue streams. >
7