War exclusion and its implication on cyber attack claims

War being a catastrophic event of unimaginable scale is generally kept as an exclusion in every property and casualty policy.

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Suvajit Chandra
AO, Underwriting
United India Insurance Co Ltd,
Regional Office, Kolkata.

ABSTRACT

However, with time the nature of warfare has also changed, and traditional wording may not be adequate. The cyber attack called the NotPetya attack was launched in 2017 and after investigation, various governments put the responsibility for the attack on Russia and its military. It was seen as an extension of the ongoing conflict between Ukraine and Russia. Two American corporations - Merck & Co. and Mondolez International suffered significant damages due to the cyber attack and raised claims in their respective policies. The claims were initially denied on the ground of war exclusion. The Court granted the claims and concluded cyberattacks can't be termed as war. One of the significant impacts of the NotPetya-related events was Lloyd's changed its wording for its cyber insurance.

Exclusions in an insurance contract are specified events whose operation or occurrence doesn't give rise to a claim when the said event proves to be the proximate cause of any damage or loss. While the list of exclusions may vary from one policy to the other, and from one insurer to the other, one of the most common and prevalent exclusion which is found in every property and casualty insurance policy is War Exclusion. Probably the only exception to this norm is Marine policy and Aviation policy.