Warren Buffett has warned that risky cyberinsurance could lead to massive losses. The CrowdStrike outage may be biggest test yet and a ‘bad…
Warren Buffett and Berkshire Hathaway's top insurance executive warned this year about the potential for massive losses from cyber insurance policies.
"That aggregation potential can be huge, and not being able to have a worst-case gap on it is what scares us," he said."Insurers have been worried about something like what happened with CrowdStrike since cloud adoption happened," said Dale Gonzales, chief innovation officer at Axio, a cyber security risk analysis company.
The cybersecurity insurance market did get lucky, in some respects, with the CrowdStrike meltdown. For one, there were no significant physical damages, such as explosions at power plants, dams bursting, or fires caused by overheating equipment, which are becoming Another factor in holding down losses and distributing them unevenly across the globe is that the CrowdStrike failure impacted places like Australia and Pacific Asia in the middle of the business day, but other markets, including the U.S., were hit during the night or early morning and many businesses were able to get systems back up within hours.Not all cyber experts are expressing as much confidence at this point.
"The U.S. is far and away the region with the highest rates of cyber insurance adoption, so I am guessing that this will be a bigger event for the cyber insurance industry both in terms of how many claims are filed and how big they are," Wolff said."Cyber insurance policies can be dramatically different. There is no standardization; terms and conditions can differ within a company depending on who wrote the policy," Glombicki said.
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