Cyber insurance professionals well remember the market shake up and debate a year ago when Lloyd’s Market Association announced model cyber war clauses. As we reported, the announcement led to market confusion, claims such an attack could cost trillions of dollars, push back about such dramatic reports on the cost of cyber war and growing momentum for government back-stops for the cyber insurance market.
What got less publicity was the subsequent effort by insurers to modify their cyber war clauses. Law firm Jenner & Block has a useful new summary on the issue, which dissects the Lloyd’s clauses and reviews the modifications sought by major carriers: “Other insurers and brokers subsequently followed suit, introducing proposed modifications to these model cyber war and cyber operation clauses, or in some instances new clauses, in an attempt to address cyber incidents purportedly involving sovereign state and government actors as part of the evolving dialogue in the insurance market. For example, Chubb, Beazley, and Marsh have each made submissions to the London Market for review for compliance with Market Bulletin Y5381…”
The note also questions some of the assumptions behind calls for a government cyber war back-stop, which is expected to be announced this year by the Biden Administration.