Lawsuits and insurance claims for damages caused by the 'Love Bug' are expected as companies seek to recover money lost on downtime and cleaning
up their systems.
NEW YORK, 6 May 2000 - Insurers won't be footing the bill for
the estimated $10 billion of damage caused by the 'Love Bug'
virus and its variations, they said on Friday, because most
companies don't have special coverage, and the ones that do
probably escaped serious damage.
``Although it's the early stages, I don't think we'll see any
claims,'' said Robin Furber, head of the Cyber Risks Practice at
Willis Corroon Group Ltd., the world's No. 3 insurance broker:
''But that doesn't mean that our clients won't have had financial
losses of some sort.''
The 'Love Bug' virus, which hits electronic-mail systems
around the world on Thursday and continued to plague systems on
Friday in new incarnations is causing $1 billion to $1.5 billion
of damage a day, said Computer Economics analyst Samir Bhavnani,
with the total cost possibly reaching $10 billion.
Major U.S. business insurers, including American
International Group and St Paul Cos., had not received any
virus-related claims by Friday afternoon, a spokeswoman from the
Insurance Information Institute said, although claims might
emerge over the weekend.
Insurers were not likely to have a big payout because
specialized virus policies are still in their infancy, Furber
said, and while 99 percent of banks and other key financial
institutions have special computer crime polices, their
mainframes were well-isolated, and damage is not likely to exceed
the $5 million - $10 million starting point of most large policies.
Furber said he didn't see any major claims from Melissa, the
similar virus which hit e-mail systems in March last year, only
some small clean-up claims.
Claim away, says attorney
``The policies offered to most U.S. businesses include
business interruption,'' said Kirk Pasich, an attorney at a Los
Angeles law firm and an expert in insurance coverage disputes, in
a telephone interview with Reuters: ``Those policies cover all
risks that are not expressly excluded -- and even if you are not
100 percent sure that your policy covers this kind of event, you
need to notify your insurance broker or insurer as soon as
``I'm not surprised if insurers say no to claims, but simply
taking no as an answer is not the right approach,'' said Pasich,
who has litigated several cases against insurers denying
Next week could see a welter of lawsuits and insurance claims
as companies seek to recover money lost on downtime and cleaning
up their systems.
``I would not be surprised if at this point next week there
have been a bunch of lawsuits by people saying you sent me a
virus, or your directors and officers should have done this or
that -- or against Microsoft saying you should have designed your
software better,'' said Pasich.
Melissa on steroids
``Is it covered? Absolutely - it's an insured event,'' said
Ty R. Sagalow, leader of AIG's recent entry into the Internet and
e-commerce liability insurance market. ``These types of viruses
are a major reason companies need to buy my policy.''
None of his six policyholders had yet notified him of any
claim, Sagalow said. AIG's special new policies would cover virus
damage, though traditional policies would not, he said.
``Melissa didn't do a lot of damage per se,'' said Sagalow,
''but this virus is Melissa on steroids, and it has not stopped
causing a tremendous amount of damage''.
The likelihood of companies filing negligence suits against
others who sent them the virus was great, he said.
``If you don't know who the original crook is, but you know
who sent you the virus, even inadvertently, there's nothing to
stop an attorney starting a case alleging good, old-fashioned
negligence, for not having anti-virus software,'' Sagalow said.
``It's a nasty thing to do, but its only a matter of time,''