Fitch Ratings says CrowdStrike outage unlikely to impact insurers
Date
7/23/2024 3:51:58 AM
(MENAFN) Fitch Ratings stated on Monday that the recent software incident involving US-based cybersecurity provider CrowdStrike is unlikely to significantly impact the financial results of global (re)insurers. According to Fitch, the preliminary loss estimates from the incident, which range in the mid-to-high single-digit billions of US dollars, are not expected to cause a material effect on insurers’ overall financial stability. However, the final impact is still subject to ongoing claims and litigation related to the incident.
The rating agency noted that the insurance lines most affected by the incident will include business interruption, contingent business interruption, and cyber-insurance. In addition, smaller lines such as travel insurance, event cancellation, and technology errors and omissions are also expected to be impacted. Fitch emphasized that various mechanisms will mitigate the extent of insured losses, including the lack of insurance coverage, high deductibles, sub-limits, and the time element periods associated with business interruption claims.
Most business interruption claims arising from cyber-incidents have time element periods ranging from eight to 12 hours. However, industries that require continuous operation, such as hospitals and airlines, may experience more significant impacts due to their need for 24/7 availability and often less robust redundancy systems.
Following the major IT outage caused by a software update last week, CrowdStrike’s shares experienced a sharp decline. On Monday, the company's stock fell an additional 13.46 percent after already dropping 11.1 percent on Friday, reflecting ongoing investor concerns and the broader impact of the incident on the company's market performance.
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