From Los Angeles to London, last week’s “Love Bug” computer virus has generated a lot of speculation over the extent of the losses caused to business, and to what extent they were covered by insurance.
So far the word seems to be that it will not have much impact, but this is not totally certain.
On Friday, the day after the virus hit, L.A. attorney Kirk A Pasich issued a statement in which he urged “businesses impacted by the ‘ILOVEYOU’ virus to notify their insurance company or broker immediately of damages to their business.” Pasich warned insured companies to give such notice, “even if you are not 100 percent sure that your policy covers this kind of event.”
His main point was that policies covering “business interruption, “all risks,” and specific coverage of e-commerce and electronic data processing, require prompt notice, and claims might be rejected unless notice was given. Notice, however, in itself doesn’t constitute a claim.
In New York, Reuters quoted Robin Furber, head of the Cyber Risks practice at Willis Corroon Group, as saying, “Although it’s the early stages, I don’t think we’ll see any claims.” Furber may be optimistic.
Total damages from the virus, which encompass expenses to cleanse and reinstall affected systems, downtime and lost business, plus potential lawsuits for ineffective or deficient safeguards,could reach $15 billion by some estimates.
According to Reuters, AIG’s Ty R. Sagalow, who leads its entry into the Internet and e-commerce liability market, thinks that there’s no question about coverage. “It’s an insured event. These types of viruses are a major reason companies need to buy my policy,” he was quoted as saying.
More or less the same comments came from Lloyd’s, who has initiated several e-commerce coverages recently, calling “Love Bug” type viruses, “the biggest insurance risk of the 21st century.”
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