The CrowdStrike outage is a wake-up call about the systemic risks surrounding the technology, but one that will be manageable for the insurance and reinsurance industry, W. Robert Berkley, Jr., president and CEO of WR Berkley, said in commenting on the outage.
The global IT outage, which was caused by a security update from Texas-based global cybersecurity company CrowdStrike, caused widespread issues with Microsoft Windows, affecting 8.5 million Windows devices.
The healthcare, financial and aviation industries were affected. The event caused widespread disruption but is not expected to have any long-term effects. The majority of the insurance industry’s losses are expected to come from business interruption claims.
During WR Berkeley’s second-quarter 2024 earnings call, CEO Berkeley was asked about the company’s potential risks regarding this event and responded: “This is certainly a topic that’s on many of our minds. We’re wondering and dreaming about how this might play out in terms of market conditions.”
“But at the end of the day, will there be some level of underactivity on our books? Yes, probably. But given what we know today, we don’t believe at this stage that this will be a material loss to the organization.”
Barclay said any losses caused by the event will be manageable, depending mainly on how quickly people are able to bounce back.
“When the day is over and any kind of disruption is proposed, there’s usually a one-hour grace period that goes along with it,” he said. “So, given when the patch was made available and how quickly some of the more sophisticated institutions were able to recover, I think we can say it’s manageable.”
“So while it would be surprising if there were no losses at all, we don’t expect at this stage that this will be anything significant or have a major impact.”
Barclay believes the incident was a “warning, a wake-up call about the systemic risks that exist in many of the technologies the world uses to run” for both the industry and society.
Also, when asked what proportion of the company’s overall policy book that size represents as a percentage of net written premiums, he said, “Less than a few percent.”
