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InteractiveWeek: Insurance Rates Rising

Oct 08, 2001, 19:30 (7 Talkback[s])
(Other stories by Robert Bryce)

[ Thanks to Darryl Tang for this link. ]

"The Sept. 11 terrorist attacks, which may cost insurers up to $40 billion, will further weaken an already ailing industry. Fewer reinsurers will share the risk borne by insurance carriers, shrinking the supply of available coverage. That will almost certainly result in upward pricing pressure on cyberinsurance - a market the Insurance Information Institute estimates could generate $2.5 billion in annual premiums by 2005.

"This is the toddler stage of a hard market," said Brian Brown, Zurich Surety's regional manager for e -business solutions. Large reinsurers were skittish about cyber-risk coverage long before global networks were rocked by the Code Red and Nimda worms. And the reinsurers continue to fear that all of their cyber-risk clients could get hit by worms - and file claims - at the same time. The worms are "potentially an earthquake across the entire Internet. And we underwrite against that," Brown said.

Insurers are also paying more attention to software. This summer, J.S. Wurzler Underwriting Managers raised premiums by up to 15 percent on clients that use Microsoft's Windows NT or Internet Information Server. Wurzler found that system administrators who use open source systems tend to be better trained than those who use Microsoft. Wurzler's stance was bolstered last week when John Pescatore, Gartner's research director for Internet security, advised companies that were hit by both the Code Red and Nimda worms to quit using IIS immediately and switch to more secure platforms like Apache."

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