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Cyber coverage focuses on business interruption as triggers evolve

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ATLANTA — Cyber coverage continues to evolve as the focus on types of perils changes, according to a panel of insurance industry experts speaking Thursday morning at the 30th annual Professional Liability Underwriters Society Conference in Atlanta.

The nature of the threat and coverage is changing, panelists said.

“Business interruption has become the driving coverage behind cyber coverage,” said Tim Francis, vice president of cyber insurance for Travelers Cos. Inc. in Hartford, Connecticut.

Business Interruption is supplanting security issues as a focus of coverage, they added.

“Originally it was a computer security failure, an outside attack,” said Christina Terplan, a partner with Clyde & Co U.S. L.L.P. in San Francisco. “The last few years, we’ve really started to see systems failures as a new type of trigger.”

Speakers also emphasized key differences between cyber incidents and coverage for property business interruption.

“With property coverage and damage, there is typically going to be a much longer interruption,” said Desiree Spain, an underwriter with Beazley P.L.C. in Atlanta. For example, if a facility burns down, it could take months to recover. “In cyber, that interruption is going to be much shorter,” on the order of a week or two. “Two weeks is actually quite a long time for a cyber event,” she added.

Making clients aware of the evolving nature of cyber coverage and policies and the differences from property business interruption has been a new task for brokers.

“I think it has been a challenge for a lot of us as brokers,” said David Lewison, senior vice president and national professional lines practice leader for AmWINS Group Inc. in New York.

“Our challenge as brokers now, with 80-plus markets, is seeing how everybody treats this issue — the triggers, periods of indemnity,” Mr. Lewison added, as insurers use different language, terminology and other variables such as indemnity period in their policies.