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DLA's Dispute with Insurer Hiscox Had Nothing to Do With "War Exclusion"

April 4, 2019

Hat trip to my friend and cyber-insurance expert Judy Selby. In an earlier post, I had discussed DLA Piper's dispute with its insurer Hiscox. It appears that just about everyone in the press initially got the story wrong. Initial reports said that the claim was related to the NotPetya cyber-attacks (that part was true) and that the insurer was citing a war exclusion clause as a reason for non-payment, which proved not to be true. An SC Media report corrected the story after a phone call with a Hiscox spokesperson. 

It was confirmed that DLA Piper does not have a cybersecurity specific policy and that this is central to the dispute, with the Hiscox spokesperson saying, "They are making a claim which we are disputing. They don’t have the right cover. It’s not a cyber policy and its nothing to do with war exclusion."

This was followed up with a written statement to SC Media UK in which Kylie O'Connor, head of group communications, Hiscox Partner said, "The dispute we are in with DLA Piper, is not about a cyber policy and has nothing to do with a war exclusion."

It was reported that a ransomware attack wiped out systems at DLA Piper and cost the firm 15,000 hours of extra overtime for its IT staff and that Hiscox won't pay out for the damages and costs associated with the attack which may amount to several million pounds.

Many international companies were hit by the NotPetya attack, with Maersk, the world’s biggest container shipper suffering losses of up to US$300 million (£227 million), thus potential insurance claims could be staggering if allowed. As confirmed above, the DLA Piper claim is being made under a general insurance policy rather than a specific cyber-insurance policy, and the non-payment is not due to a war exclusion.

Had Hiscox been using a 'war' exclusion clause based on the source of NotPetya being identified by the UK government as coming from Russia, it could potentially have undermined the growth of cyber-insurance since this kind of damage is part of the reality of the current threat landscape.

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