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LONDON-Insurers face huge claims from Year 2000-related computer problems regardless of whether their policies contain exclusions, a computer technology expert contends.

Richard Coppel, chief executive of Prove It 2000, a manufacturer of software specifically designed to handle anticipated Year 2000 problems, said in a statement that insurance companies' exposure to claims is inevitable because they will have no way of knowing what actually caused a computer system to malfunction. If an insurers knew what caused a problem, and if the policyholder could have prevented it, the insurer could deny the claim. he said. But the burden of proof will be on the insurer.

The best way for insurers to minimize their exposures is not by issuing coverage exclusions, but by helping companies to take steps now to reduce their chances of suffering computer-related problems in 2000, Mr. Coppel stated.

"The possibility of a massive bill could be avoided if the insurance industry helped IT experts to specify what constitutes compliance and then introduced guidelines for companies to prove their systems are ready to move into the next century," he stated.

If insurers pursue their present course of excluding coverage of Year 2000-related losses, they not only may deprive themselves of premiums, as policyholders turn to other companies for coverage, but they also are failing to eliminate their exposures to the risks.

With the cause of computer-related losses often impossible to prove, many companies will remain covered for losses under standard data loss insurance policy, Mr. Coppel maintained.

Claims will be difficult to assess because, contrary to common belief, there will not be a sudden collapse of systems at midnight on Dec. 31, 2000, Mr. Coppel said. The Year 2000 problem will spread slowly through companies' computer systems and often not start to take effect until weeks or even months later.

The Assn. of British Insurers has expressed similar views about year 2000 exposures.

While responses to a questionnaire sent to its members indicate that most commercial insurance policies will exclude year 2000 exposures, a report by the ABI's Science and Technology Committee concluded that "the potential ramifications of the millennium problem were considered to be so many and unpredictable that the effectiveness of standard exclusion clauses was uncertain."

While Mr. Coppel acknowledged that there is no single solution to all of the problems that could affect computers in the year 2000, he said cures are available for some of the problems.

He maintained that losses will be greatest among small- to medium-sized businesses, where very little is being done to address the threat.

"Our feeling is (that) the insurance companies are much better placed than anybody else to push forward the issues to solve the problem," he said. Dealing with the Millennium Bug is mostly about project management, and insurers could tell companies that if they follow a particular route, and carry out certain procedures to minimize or eliminate the risk, then they could be eligible for coverage if losses still occur, he suggested.

Mr. Coppel acknowledged that one reason insurers are wary of giving advice is that they fear they could face legal action for negligence if a policyholder suffered a loss after following their loss prevention advice.

For this reason, Mr. Coppel said he welcomed a move earlier this month by President Clinton to promote legislation that would give businesses some degree of immunity from lawsuits if information they exchanged about fixing the bug inadvertently turned out to be inaccurate.