Kathmandu. It is estimated that insurers will have to bear insurance claims of up to $700 million due to technical problems at Microsoft 365 and Exchange Online seen in users and businesses around the world.
Shalom Bublil, co-founder and chief product officer of cyber risk analysis firm Cower, was quoted as saying by Business Recorder.
The technical outage, which began on the afternoon of November 12, caused many business users around the world to be away from services such as Outlook, Teams and Copilot. Microsoft clarified that the service outage was caused by a technical issue related to network capacity upgrades and that it was not a cyber attack.
This incident has brought the technical and policy aspects of third-party technology disruption and business interruption insurance claims back into the spotlight.
Cyber insurers typically specify a fixed waiting period for making a business interruption damage claim, which can be around 4 hours on average for small organizations and 8 to 12 hours or more for large organizations. For the claim to be valid, the organization must show proof that the disruption has occurred longer than that period and that there has been a loss of actual profits or income.
While many cyber insurers cover contingent business interruption caused by third-party vendors, some policies may have different terms related to cyberattacks or malicious acts. Therefore, analysts say that the policy terms will be closely scrutinized in the claims process.
Aviation, government and public services, financial services, healthcare, corporate operations and telecommunications are among the sectors most affected by the disruption.
The total insurance damage from the outage varies from organization to organization. Kovar estimates about $700 million, Morningstar DBRS estimates $300 million to $500 million, and Marsh Rea and experts estimate a limited or minimal impact.
On the other hand, according to a report published by CNN, citing calculations from economic consultancy Andersen Economic Group, the overall productivity and economic costs caused by the disruption are expected to reach $7 billion. Microsoft said services were returning to normal as of Friday.
