When Environmental and Cyber Risks Meet

When Environmental and Cyber Risks Meet

February 23, 2018 Uncategorized 0 Comments

Ever since the late 1960s environmental risks and how to insure them have been an ongoing issue in the insurance industry. In recent years cyber risk has taken on growing importance. Now we must consider the likelihood that cyber attacks will trigger environmental losses, and ask who will insure the resulting claims.

Cyber attacks on infrastructure resulting in environmental claims are not a new phenomenon. As far back as 1994, a hacker accessed the Salt River Water Project computers to gain control of water levels. More recent attacks have targeted sewage treatment, nuclear power, electric power, energy, manufacturing and healthcare systems. With the growth in the Internet of Things the threats will only increase. Small businesses such as gas stations and auto mechanics will be impacted as much as large organizations.

As cyber insurance evolves some insurers are covering bodily injury and property damage in addition to data breaches. However, cyber policies may have a pollution exclusion. These exclusions will either have to be deleted or have an exception for pollution triggered by a covered incident if cyber policies are to cover environmental claims.

Environmental policies are more settled. They cover bodily injury, property damage, environmental damage and  response costs. Unless cyber attacks are excluded, a loss is covered. However, organizations that only consider traditional sources of contamination may not realize they are at risk for environmental loss from a cyber attack, and not have coverage in place.

As risks continue to evolve, organizations must continue to review their exposures and ask if their insurance is up to date. Beacon is ready to assist you.

About the Author

Harry Cylinder

Harry Cylinder, CPCU, ARM has spent nearly fifty years in the insurance industry, the majority of the time as a consultant. He has been employed by The Beacon Group of Companies since 2008, specializing in the review and analysis of property and casualty coverage forms. Mr. Cylinder has been reviewing policy forms as they have evolved over the past decades. In 2008 he published an article in the CPCU Journal which was the first description of cyber insurance coverage for a general insurance audience. Since that time he has regularly written on cyber and other topics for The Beacon Companies’ blog.