[IWAR] Y2K Insurers limiting their liability

From: Michael Wilson (MWILSON/0005514706at_private)
Date: Tue Dec 23 1997 - 12:13:58 PST

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                          Insurers limit millennium bomb losses
          Copyright ) 1997 Nando.net
          Copyright ) 1997 Scripps Howard
       (December 23, 1997 00:36 a.m. EST http://www.nando.net) -- The U.S.
       insurance industry has moved to protect itself against losses arising
       from the "millennium bomb" by drawing up special exclusion clauses.
       The move follows similar action in Britain, where insurance companies
       last month decided to exclude such risks from standard policy wordings,
       prompting immediate protests from commercial insurance buyers.
       The millennium bomb is a problem arising from the inability of some
       computer software to distinguish between this century and the next. At
       the turn of the millennium, many computers and machines could
       malfunction, causing billions of dollars in damage to business.
       Insurance regulators in 25 states have approved wordings for general
       liability policies excluding any claim for losses related to the failure
       of computer systems to recognize dates during 2000 and beyond.
       "This kind of problem is not a fortuitous event," said David Oswald of
       the Insurance Services Office, which has drawn up the clauses. "There is
       no loss experience for this either, so nothing is built into standard
       rates. If anybody wants coverage for this, we think it is only proper
       that something extra be charged."
       For small businesses and retail outlets, the additional cost of securing
       cover would probably be minimal, he said. But large multinationals could
       face additional expenses running to millions of dollars.
       Insurance brokers have criticized the wordings, saying the exclusions
       were too broad. Todd Muller, assistant vice-president at the Independent
       Insurance Agents of America, said brokers were also concerned that the
       standard exclusion clauses were unfairly aimed at smaller businesses,
       which did not usually negotiate individual terms.
       He compared the latest move with the "excruciating" experience that
       followed exclusion of pollution liability several years ago, when
       insurers were accused of refusing to cover companies which had no
       identifiable exposure to such a risk.
       By CHRISTOPHER ADAMS, Scripps Howard News Service

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