The CrowdStrike outage is a warning to industry to stay on top of emerging cyber risks, ratings agency AM Best says.

As insuranceNEWS.come.au has reported, a software update from the US-based cybersecurity provider is believed to have clashed with Microsoft Windows and brought systems down across the globe.

“CrowdStrike is exactly the kind of aggregation risk that the industry is worried about,” AM Best senior director of industry research and analytics Sridhar Manyem said.

“One security bug or a software flaw has the potential to bring down businesses such as airports, the aircraft industry, financial institutions or software companies.

“The interconnectedness of systems was on full display … and demonstrated how businesses can be brought to a standstill abruptly and on a large scale. This incident is likely going to impact multiple insurers.” 

Mr Manyem says the full impact on insurers is not yet known.

“Current loss estimates are preliminary … but we think this could be an earnings event due to underwriting terms (limits, higher deductibles) and reinsurance.

“Insurers have been tightening underwriting standards through increased retentions, manageable limits, shifting their focus to small and medium-size enterprises, the use of reinsurance, etc. This is still developing and has the potential to be a contracted claims and legal process, and we will be monitoring the situation.

“This event serves as another example why cyber is such a dynamic market and clients/insurers need to be on top of emerging issues.”