Insurance Industry Struggles with the Aftermath of Microsoft’s Global Outage

• The global Microsoft outage on Friday is expected to trigger an insurance catastrophe.
• Industry experts are expecting thousands of businesses to file for interruption claims to get compensated for their lost time and money.
• However, the circumstances of Friday were different from what a usual business interruption policy covers - most businesses will not even qualify for coverage.

The global Microsoft outage that hit the world on Friday has now disrupted the insurance industry as well. Experts from the insurance industry said that insurers are expecting a string of business interruption claims.

This was further confirmed by Ryan Griffin, a partner focused on cyber at insurance broker McGill and Partners.

Insurers are bracing for hundreds, if not thousands, of claim notifications from organizations that are impacted by the CrowdStrike event.' - Ryan Griffin

Nir Perry, CEO at CyberWrite also added that this event is the perfect example of an insurance catastrophe". Economic damages are expected to reach tens of billions.

What Is a Business Interruption Claim?

A business interruption claim provides monetary coverage in case the business is halted and there's a loss of income due to direct physical loss or damage.

But the circumstances that happened on Friday were vastly different from what's usually covered under these policies. So not all businesses will get compensated for their lost time and money.

When it comes to cyber issues, mostly malicious events such as security breaches are compensated for. And since CrowdStrike CEO George Kurtz has made it abundantly clear that this was not a security incident, insurers are not liable to pay.

And even if this technical outage is covered for a certain business, they need to consider the deductible and waiting period. In the end, it might not even be worth filing a claim.

Plus, business interruption claims are usually not part of a base plan. You need to buy them separately as an add-on. So it's highly probable that many businesses will not even have such coverage.

About the Outage

On Friday, thousands of users across the world were unable to log into their Microsoft PCs and laptops. The dreaded blue error screen was the only thing they could see and even though the device claimed to be fixing the issue", no progress was ever made.

What seemed like an individual issue soon turned out to be the biggest tech outage ever. Microsoft's systems had crashed and CrowdStrike (a cybersecurity company) is to be blamed for it.

CrowdStrike was trying to update its software for Microsoft but its update file had a bug that crashed Microsoft's internal systems.

This caused a lot of disruption across the US, UK, Japan, India, Australia, Switzerland, and the Netherlands.

• Thousands of flights were either canceled or delayed
• Airports were crowded with passengers as the processing time increased
• Supermarkets were unable to accept card payments and hospitals
• Pharmacies had trouble pulling up patient data

CrowdStrike has apologized for this disruption and the underlying cause has already been fixed. But it will be a while before everything can go back to normal.

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