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September 2022 – Lloyd’s of London will no longer provide cover for catastrophic state cyber attacks through its standard cyber policies from March 31 next year. Lloyd’s is a marketplace where insurance brokers from around the world negotiate directly with the insurers covering their clients’ risks.
From Q2, 2023, parties negotiating at Lloyd’s in the marketplace must make it clear to their customers that physical and digital damage resulting from “catastrophic” cyber attacks is no longer covered by standard cyber policies. Lloyd’s said in a statement to insurance companies that the damage that state cyber-attacks can cause could be a systemic risk to the insurance market. (pdf).
For example, many insurance policies already state that war damage is not covered. Lloyd’s argues that cyber policies are important but must be properly managed due to the changing threat landscape. In particular, the ability of hostile actors to launch an attack, the ability to spread malicious code, and the vital reliance societies have on their IT infrastructure, including the operation of physical resources, means that losses could be much greater. than what the insurance market can handle.”
In conjunction with the NIS2 directive, the impact for datacenters is significant as datacenters are required to report cyber incidents and will be supervised by their respective national authorities. Negligent directors can face personal penalties in the event of a serious cyber accident. A duty of care is mandatory, but the risk can no longer be insured. Inevitably, datacenters will need to take extensive cybersecurity measures to increase their cyber resilience.