CrowdStrike event insured loss to fall between $300m & $1bn: Guy Carpenter

Insured losses from the CrowdStrike-linked global IT outage will fall between $300 million and $1 billion, as per a new report from Guy Carpenter.

For those unaware, On July 19, CrowdStrike, a leading cybersecurity technology provider, released a “Rapid Response Content” update to its EDR tool named Falcon, sitting on Microsoft Windows devices.

This update contained a software coding flaw that reportedly affected 8.5 million Windows devices. CrowdStrike promptly reverted the update and introduced a fix, but the impact was significant.

“The CrowdStrike event highlights the potential severity of digital supply chain interconnectedness, as it disrupted not only CrowdStrike’s customers but also propagated through third-party networks, impacting the resilience of seemingly unrelated industries,” Guy Carpenter said in its report on the matter.

The firm continued, “However, in the immediate aftermath we observe that insurers are carefully considering the implications of this event and continuing to support their clients with unchanged coverage, thus demonstrating the resilience of the cyber insurance market.”

According to Guy Carpenter’s estimates, less than 1% of companies globally with cyber insurance were impacted.

At the same time, with a quickly introduced fix, many organisations are said to have had the opportunity to mitigate the outage before the waiting period expired for business interruption claims.

“Typically, those range between 4 to 12 hours in cyber insurance policies. As a result, the likely insured loss is between $300 million and $1 billion,” Guy Carpenter explained.

The firm said that its findings align with the conclusion that this event would not result in a material loss for most insurers, although this could change based on the wordings adopted by carriers, concentration of underwriting within affected industry sectors, and uptake of System Failure coverage.

A range of initial insured loss estimates have been issued for the global IT outage, although their scope differs greatly.

Parametrix is estimating insured losses of between $540 million to $1.5 billion for US Fortune 500 companies (excluding Microsoft), CyberCube has released a range of $400 million to $1.5 billion for just the standalone cyber insurance market, and Coalition is expecting insured losses of $960 million for US cyber writers alone.

Guidewire Cyence has also suggested that the total economic loss from the event will fall somewhere between $1 billion and $3 billion.

Meanwhile, the majority of respondents to a recent Reinsurance News poll believe the total re/insurance industry loss from the CrowdStrike-linked IT outage will surpass $1 billion, with 38% of voters anticipating that losses could exceed $1.5 billion.

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