Parametrix: Insured losses From CrowdStrike outages could hit $1.08 Billion among Fortune 500

Parametrix: Insured losses From CrowdStrike outages could hit $1.08 Billion among Fortune 500 | Insurance Business Australia

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Parametrix: Insured losses From CrowdStrike outages could hit $1.08 Billion among Fortune 500

Total losses forFortune 500 could amount to $5.4bn

Insurance News

By
Althea Javellana

Recent outages stemming from CrowdStrike have projected financial repercussions amounting to $5.4 billion for Fortune 500 companies, according to the latest analysis by cloud monitoring expert and Lloyd’s coverholder, Parametrix. The company anticipates that only 10% to 20% of these costs will be recoverable through existing cyber insurance policies.

The insured losses are estimated to fall between $540 million and $1.08 billion. Notably, the calculations excluded Microsoft, focusing instead on the broader impact of the July 19 event triggered by a defective software update from CrowdStrike. This update led to a logic issue, causing widespread computer crashes globally.

Parametrix’s findings suggest that, on average, each affected Fortune 500 company could face $44 million in losses. The scale of the impact varies by industry, with manufacturers experiencing minimal effects—estimated losses at just $6 million—while airlines faced up to $143 million in damages.

Yonatan Hatzor, co-founder and chief executive officer of Parametrix, said that the recent event underscores the extent of potential systemic cyber losses and the limitations of current insurance models. “This incident provides a clearer picture of how cyber risk can be managed more effectively through diversified insurance portfolios,” Hatzor said.

The analysis earlier in the week by broker Aon highlighted that the event was non-malicious, categorising it under “system failure” within cyber policies. This type of coverage typically addresses business interruption, which is expected to bear the brunt of the claims, particularly where system failures disrupt operations.

The report also noted significant disruptions across various sectors. The healthcare and banking sectors are poised to absorb over half of the total losses, equating to approximately $1.94 billion and $1.15 billion, respectively, despite constituting only 20% of total Fortune 500 revenue. In stark contrast, the manufacturing sector reported negligible financial impact.

Insurance broker Acrisure has been preparing for a surge in claims related to the outages, particularly in business interruption and dependent business interruption categories. Meanwhile, approximately 8.5 million Windows devices were compromised, affecting over 3,000 flight cancellations and causing delays to 23,900 more.

Parametrix highlighted the resilience of cloud-based systems, which exhibited quicker recovery times compared to traditional computing setups. The report encouraged insurers to model future failures more comprehensively, incorporating both cloud-based and on-premises data.

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