The CrowdStrike outage is a wake-up call for the systemic exposure that exists around technology, but it will prove manageable for the insurance and reinsurance industry, W. Robert Berkley, Jr., President and CEO of W. R. Berkley stated as he shared some comments on the event.
Caused by a security update from CrowdStrike, a global cybersecurity firm based in Texas, this global IT outage led to widespread issues with Microsoft’s Windows, affecting 8.5 million Windows devices.
The healthcare, financial and air travel industries were impacted. Despite the event having caused widespread disruption it is not expected to have a lasting impact; business interruption claims are expected to drive the bulk of insurance industry losses.
During W.R. Berkley’s Q2’24 earnings call, CEO Berkley was asked a question on the firm’s potential exposure with regards to this event, to which he answered: “It’s certainly a topic that many of us have been scratching our heads over. Wondering and daydreaming about what will come of it as far as market conditions.
“But when the day is all done, as far as our book goes, will we have perhaps some level of low activity? Yes, perhaps. But given what we know today, we don’t see this being a material loss to the organisation at this stage.”
According to Berkley, the losses caused by this event will be manageable, mainly because of how quickly people can get back on their feet.
He stated: “When the day is all done, to the extent that some type of business interruption is offered, usually, there’s an hour’s clause associated with that. And consequently, given when the patch was available and how quickly people, particularly institutions that have some level of sophistication could get back on their feet, we think it will prove to be manageable.
“So, I would be surprised if we didn’t have any loss activity, but we certainly do not envision this being something of materiality or great consequence at this stage.”
For the industry, as well as for society, Berkley believes this event “was a reminder or a wake-up call for the systemic exposure that exists around much of the technology that the world uses to operate.”
He was also asked as a percentage of net written premiums, what proportion of the firm’s overall book might that size to, to which he replied “less than a couple of percent.”
