Insurance claims could hit $71bn
A cyber attack on the US power grid could cost the US economy more than $1tn, according to a report by Lloyd’s.
The Business Blackout report, produced with the University of Cambridge’s centre for risk studies, looked at the damage from hackers attacking generators and leaving 93 million people without electricity.
The report said that the total damage to the US economy would range between $243bn to more than $1tn.
Insurers would pay up to $71.1bn in claims in the most extreme scenario, the report said.
Speaking at the launch event in Lloyd’s this morning, RMS senior vice president Andrew Coburn said that most insurance claims would be due to contingent business interruption – suppliers extension (up to $25.4bn), followed by liability claims from companies that lose power (up to $12.4bn).
Next in line are contingent business interruption claims from critical vendors (up to $12.3bn) and business interruption claims from energy firms (up to $11.4bn).
Lloyd’s director of performance management Tom Bolt said: “This scenario shows the huge impact and havoc that could result from a major cyber attack on the US. The reality is that the modern, digital, and interconnected world creates the conditions for significant damage, and we know there are hostile actors with the skills and desire to cause harm.
“As insurers, we need to think about these sorts of complex and interconnected risks and ensure that we provide innovative and comprehensive cyber insurance to protect businesses and governments. This type of insurance has the potential to be a valuable tool for enhancing the management of, and resilience to, cyber risk.
“Governments also have a role to play. We need them to help share data, so we are able to accurately assess risk and protect businesses.”