Russia War Raises Global Insurers’ Cyber Claim Exposure

March 11, 2022 – Published on Law360

Global insurers are on high alert for an increase in cyberattack and business interruption claims as a result of Russia’s invasion of Ukraine, facing growing exposure as the networks of Ukraine and its Western allied countries’ critical infrastructure sectors are attacked and threatened.

Ukraine’s critical infrastructure, government services, banks and telecom sectors have already been hit with cyberattacks since late February. Amid rising military and diplomatic support from the United States, United Kingdom, European Union and Japan, the chance of a systemic cyberattack spillover to those countries is “only a matter of time,” according to cybersecurity and insurance experts.

As of March 2, “within the last 48 hours, we have had seven or eight new victims of cyber hacks. Most of them are U.S.-based companies,” said Tony Cook, head of threat intelligence at cybersecurity company GuidePoint Security. The company constantly monitors the activities of 75 ransomware groups.

However, none of the attacks showed clear evidence that they are related to the Russia conflict, making it difficult for insurers to deny coverage by enforcing the policies’ act of war exclusions, he said.

“Some insurers are still taking the stance that they will help policyholders pay the ransom” because they are cautious to conclude that the attacks were initiated by Russia, said Cook of GuidePoint. Those carriers are waiting for the U.S. government to put Russia-related ransomware groups on the Treasury Department’s Office of Foreign Assets Control sanction list for them to declare that the incident is related to Russia before denying coverage, he said.

However, others have said “they are not going to cover Russia-related cyberattacks because it is clearly an act of war,” Cook added.

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