1. Cyberattack -- Intangible Damages in a Virtual World: Property Insurance Companies Declare War on Cyber-Attack Insurance Claims.
- Author
-
CHOPRA, ANGAD
- Subjects
INSURANCE claims ,CYBERTERRORISM ,PROPERTY insurance companies ,BANKRUPTCY ,INTERNET security ,INSURANCE policies ,BUSINESS losses ,WAR risk insurance - Abstract
Cyber-attacks and the monumental damages they cause are becoming seemingly ubiquitous. Large-scale cyber-attacks have become the norm, as opposed to an anomaly. In fact, cyber-attack has been rated as the number one concern for private entities given the sheer danger each attack poses on entity solvency. Ad-hoc attackers, in combination with state-sponsored cyber-warfare actors, have the capability of wreaking havoc on an entire nation or on an entire private industry. Attacks are conducted with sophistication, while cyber security regimes are lagging in meeting the challenge. The results are catastrophic, leaving private entities to incur massive costs in remediation, or in the case of smaller entitles, collapse under the weight of the attack. No attack better exemplifies this phenomenon than the NotPetya Attack of 2017. The Russian cyber-war attack aimed at the Ukrainian financial sector raced around the world, leaving companies reeling with billions of dollars in damages. The key question then becomes, can companies turn to their all-risk insurance policies to recover the damages? Surely, these very polices were designed and attained to insure against losses incurred due to any substantial risk. Surprisingly, the answer from insurers has been a resounding no. All-risk insurers turn to a rarely-invoked exception in all-risk insurance policies known as a "war-risk" or "hostile-act" exclusionary clause and argue that cyber-attacks, such as the NotPetya attack, fall within such an exception, leaving effected companies without the security blanket they assumed they had. This Note examines the history of war-risk exclusionary clauses, their invocation, and pertinence to a nuanced type of hostile act: the cyberattack. It proposes a solution to pending litigation surrounding the NotPetya attack, and advocates for courts to use the doctrine of contra proferentem, an analysis that focuses on the intention of the parties to an insurance policy, to solve currently pending suits surrounding cyber-attacks. It then proposes a nuanced prophylactic remedy, advocating for the advent of a Federal Cybersecurity Insurance Program, constructed in much the same way as war risk insurance policies created in the aftermath of World War II. This nuanced policy will be specifically tailored to risks arising out of cyber-attacks and provides an added benefit such that governmental involvement can provide national security experts with valuable information about how such attacks are being conducted, spurring innovation in cyber security. With billions of dollars at stake, it is clear that the current foundation upon which insurance in the aftermath of cyber-attack is built, is clearly untenable. [ABSTRACT FROM AUTHOR]
- Published
- 2021