Significant losses estimated after mass IT outage

Global insured losses of up to $1.5bn (£1.16bn) have been estimated following the global IT outage last Friday (19 July 2024).

The incident impacted plenty of businesses, as well as airlines and train services, with many employees waking up to the so-called “blue screen of death” and not being able to crack on with work as normal.

The chaos was caused by a faulty software update that affected Windows hosts.

Cyber security firm Crowdstrike, which rolled out the update, said that around 8.5 million Windows devices were impacted.

Cyber risk analytics firm CyberCube has estimated that preliminary insured losses for the standalone cyber insurance market sit between $400m (£310m) and $1.5bn (£1.16bn).

This would represent a loss ratio impact of roughly 3-10% on global cyber premiums of $15bn today.

“This scale of loss could make the event the largest single insured loss event in the history of the affirmative cyber insurance industry over the past 20 years,” CyberCube said.

“At the same time, an event of this scale does not come close to the extreme scenarios currently being modelled by cyber insurers and reinsurers.”

Estimates

Crowdstrike said a “significant number” of Windows devices were back online again.

Based on CyberCube’s current estimates, the incident represented a loss somewhere between the one in two and the one in six year industry loss return periods.

“CyberCube’s current estimates are provisional and based on the best information we have available, as the event is still unfolding, with a relatively significant percentage of systems yet to be restored,” the firm said.

“Each insurance carrier’s claims experience depends on some pivotal criteria relating to the characteristics of their specific portfolio, including coverage for non-malicious system failure, contingent business interruption (CBI) and the makeup of insureds in that portfolio.”