The underlying message to all insurance carriers is that they must make policy exclusions and conditions crystal clear to customers. Photo: Yurii Kibalnik/Adobe Stock
In June 2017, a small vulnerability in a Ukrainian accounting software led to what was possibly one of the most destructive and damaging cyberattacks of all time — the NotPetya. One of its most notable victims was U.S.-based pharma giant Merck, which suffered nearly $870 million in damages and $400 million in lost sales as a direct consequence of the attack.
Once the dust settled, Merck filed a property insurance claim. To the company's surprise, its insurer, Ace Insurance (Ace), did not honor the policy even though Merck's policy covered "all risks." Ace argued that since this was an "act of war" (by Russia), a U.S. insurer is exempted from covering damages related to such acts of war. In a recent landmark judgment, however, a U.S. appellate court rejected Ace's arguments and awarded Merck with a $1.4 billion payout.
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