As cyber losses increase and negatively impact insurance carriers and their loss ratio, Lloyd’s of London is proposing to exclude certain coverage from their cyber-insurance policies. The company stated that it will no longer cover any losses that result from “cyber -war”. Cyber-war is a cyber-operation that disrupts the activity of a state or organization. The insurer’s updated definition of cyber-war gives insurers a few more reasons to refuse to pay.

The company explained they can refuse to pay on nation-state-sponsored cyberattacks on services that are essential to a state’s functionality, such as financial and health services. Patrick Davidson from the Insurance juggernaut released these new Clauses and outlined these new terms.

In addition to those exclusions and terms, Lloyd’s announced that official attribution for a cyber-attack will not be needed to make exclusions from the policy. Also, the company can decide that an attack is exempt from coverage without government attribution in the event of certain circumstances.

You may be wondering what is causing this reduction in insurance coverage. If your guess was increased risk and quickly evolving threats, you are correct. Everyone is alarmed by these recent circumstances, especially insurance carriers. Not every insurer will be taking such extreme measures in response to these threats, but almost all will have increased expectations regarding security posture. Staying up to date on regulations and having an extensive plan in place to mitigate risks is crucial to keeping a company secure and insurable