Insurance marketplace Lloyd’s of London is set to introduce cyber insurance exclusions to coverage for “catastrophic” state-backed attacks from 2023. In a market bulletin published on August 16, 2022, Lloyd’s stated that whilst it “remains strongly supportive of the writing of cyberattack cover” it recognizes that “cyber-related business continues to be an evolving risk.” Therefore, the company will require all its insurer groups to apply a suitable clause excluding liability for losses arising from any state-backed cyberattack in accordance with several requirements. The move is reflective of a maturing and quickly evolving cyber insurance market.
Nation-state attacks pose systemic risk to insurers
In its bulletin, Lloyd’s of London wrote that it consistently emphasizes that underwriters need to be clear in their wordings as to the cover they are providing, with clarity surrounding cyberattacks involving state-backed actors of particular importance. “When writing cyberattack risks, underwriters need to take account of the possibility that state-backed attacks may occur outside of a war involving physical force. The damage that these attacks can cause and their ability to spread creates a similar systemic risk to insurers.”
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