Miller places first affirmative cyber war coverage in Lloyd’s of London cyber market

The evolution of Cyber War coverage 

Legacy war clauses in standard Property & Casualty (P&C) policies have always excluded “boots on ground” war, due to their uninsurable, catastrophic scale. These high-risk exposures are addressed in dedicated specialty markets.

Following Not-Petya and WannaCry, two of the most devastating cyber-attacks, the insurance industry woke-up to Silent Cyber. These events led to Property-insurance coverage disputes where courts ruled that ambiguous, legacy war clauses failed to cover modern state-sponsored digital campaigns. 

For traditional P&C lines, the solution was simple: to explicitly exclude loss or liability from a malicious cyber-attack and to offer an option with a conditional affirmation of cover. Obviously, this blanket approach could not work for the cyber market, which requires a nuanced approach to state-sponsored attacks.

In response, the London market introduced clever, threshold-based exclusions rather than a total ban on loss arising from the act itself. Lloyd’s clause LMA5567 is the narrowest and hardest-to-trigger version of these exclusions. State sponsored cyber-attacks carried out in the course of war are also excluded. 

For other state sponsored cyber-attacks, all of the listed qualifiers must be present before the exclusion can trigger. It must be a state sponsored attack on an Essential Service; it must also cause civil commotion or compromise state security and must result in the inability of the government to function. Once triggered, we can consider things like attribution, etc.