Cyber

Subscribe to Cyber

Artificial intelligence (AI) is rapidly changing the way businesses operate, from the way we research and write, to the way data is processed, to the way inventory is measured and distributed, to the way employees are monitored and beyond. Soon, artificial intelligence might be providing life advice, saving hospital patients or accelerating the development of cities. It is already reshaping corporate America. Very few, if any, industries—including the insurance industry—are immune. As the consultancy McKinsey wrote in 2021, artificial intelligence “will have a seismic impact on all aspects of the insurance industry.” McKinsey’s prediction has proved prescient.

As AI continues to influence the insurance industry and the broader economy, new opportunities and risks abound for policyholders. It is therefore essential for policyholders to keep up-to-date about insurance law’s latest frontier. To help policyholders navigate this new frontier, Hunton Andrews Kurth LLP’s insurance recovery team is introducing a new resource: The Hunton Policyholder’s Guide to Artificial Intelligence.
Continue Reading Introducing The Hunton Policyholder’s Guide to Artificial Intelligence

Last week, we published a client alert discussing the importance of cyber and directors and officers liability insurance for companies and their executives to guard against cyber-related exposures.  In today’s ever-changing threat landscape, all organizations are at risk of damaging cyber incidents, and resulting investigations and lawsuits, underscoring the importance of utilizing all tools in a company’s risk mitigation toolkit, including insurance, to address these exposures. …

Continue Reading Reducing Risks from Cyber Incidents with Cyber and D&O Insurance

Hardly a day passes without hearing about another major cyber incident. Recent studies show that cybersecurity incidents are becoming more common, but they are also costly, with some reports estimating an average cost of $9.44 million for breaches in the US. In recognition of this mounting problem, government agencies continue to ramp up enforcement and issue new rules, regulations and other guidance aimed at curbing cyber risks. Last week, the SEC adopted final rules requiring registered entities to periodically disclose material cybersecurity incidents and annually disclose their cybersecurity risk management, strategy and governance plans. In announcing the new rules, the SEC specifically noted that “an ever-increasing share of economic activity is dependent on electronic systems.” According to SEC Chair Gary Gensler, “Whether a company loses a factory in a fire—or millions of files in a cybersecurity incident—it may be material to investors.” …

Continue Reading SEC Adopts New Rules Requiring Disclosure of Cyber Incidents

The Supreme Court of New Jersey recently agreed to hear ACE American Insurance Company’s appeal of an Appellate Division decision finding that a war exclusion in a property insurance policy did not preclude coverage for Merck & Co., Inc.’s claim stemming from a 2017 cyberattack. We previously reported about this case here.   …

Continue Reading Supreme Court of New Jersey to Hear Merck Cyberattack Case

The Superior Court of New Jersey Appellate Division recently upheld a lower court’s finding that the war exclusion in a property insurance policy did not preclude coverage for Merck’s claim stemming from a 2017 cyberattack. The decision is appropriately being heralded as a huge win for policyholders and an affirmance of New Jersey’s longstanding history of protecting policyholders’ reasonable expectations. We previously blogged about developments relating to the war exclusion and the Merck case when it was initially heard by the Appellate Division. …
Continue Reading Merck Wins Again in Cyber Coverage Battle

For many, the “metaverse” sounds like some obscure sci-fi fantasyland. You may be asking, where is it? How does one get there? Chances are, if you are reading this article on a screen then you are already interacting with what could be described as the metaverse. One thing is certain though, if the metaverse is…

Last week, the Ohio Supreme Court ruled in EMOI Services, L.L.C. v. Owners Ins. Co., 2022 WL 17905839 (Ohio, Dec. 27, 2022), that a policyholder did not suffer direct physical loss of or damage to computer media that was encrypted and rendered unusable. The Court reached its ruling even though “media” was defined in the policy to include “computer software,” concluding that software does not have a “physical existence.” The Supreme Court’s decision reverses an Ohio appellate court’s earlier ruling that the cyberattack triggered coverage under a commercial property insurance policy and builds upon plainly distinguishable rulings in COVID-19 business interruption cases, such as Santo’s Italian Café, L.L.C. v. Acuity Ins. Co., 15 F.4th 398, 402 (6th Cir. 2021), where the Sixth Circuit found that government orders issued in response to the COVID-19 pandemic did not physically alter insured property.
Continue Reading Ohio Supreme Court Launches COVID-19 Holdings into Cyberspace; Denies Coverage for Physical Loss or Damage to Computer Software

A federal court recently found that a policyholder adequately plead that a loss of hundreds of thousands of dollars through wire fraud is covered under a commercial crime policy. In Landings, Yacht, Golf, and Tennis Club v. Travelers Casualty and Surety Company of America Case No. 2:22-cv-00459 , Landings Yacht, Golf, and Tennis Club (“Landings”) sued Travelers Casualty and Surety Company of America (“Travelers”) under a crime policy for denying coverage for: (1) about $6,885.79 in unauthorized withdrawals (“First Withdrawal”) from users purporting to be Landings and (2) $575,723.95 in withdrawals made by a third-party purporting to act on behalf of Landings (“Second Withdrawal”). …
Continue Reading Covered Members Only: Federal Court Accepts Yacht Club’s Wire Fraud Allegations

From IRS rulings that “virtual currency” is taxed as “property” to an SEC lawsuit claiming that digital assets are “securities” under federal law, meteoric growth of the largely unregulated crypto industry has raised numerous questions about whether crypto-related risks are covered by insurance. In the latest example of the intersection of crypto and insurance, a California federal court recently held that cryptocurrency stolen from a Coinbase account did not constitute a covered loss under a homeowner’s insurance policy. The fundamental issue was whether the stolen crypto met the policy’s requirement for “direct physical loss to property” and, more specifically, whether the losses were “physical” in nature. The court ruled against coverage, reasoning that lost control of cryptocurrency is not a direct physical loss as a matter of California law.
Continue Reading California Holds Stolen Cryptocurrency Does Not Qualify as “Physical” Loss Under Homeowners’ Policy

Like other policyholders, hard insurance market trends, aggravated by cybersecurity risks, climate change, and COVID-19, have hit higher education policyholders, yielding reduced or limited coverages for increased premiums. These conditions – reduced coverages and higher premiums – are symptoms of a “hard” insurance market. (A hard market is caused by a mismatch between policyholders’ waxing demand for coverage and insurers’ waning risk appetite.) But higher education policyholders face unique risks that exacerbate existing market conditions, including:…

Continue Reading Back to School Blues: Risk Exposures Affecting Higher Education