Insuring a ship's hull against a cyber incident

Keith Broughton, Beazley Keith Broughton, Beazley

The navigation systems on your vessel shutdown or malfunction at a critical time due to a cyber event and it crashes into the wharf leaving a huge gash in the hull. It’s a nightmare scenario that is becoming all too real in the interconnected world and could leave the shipowner with a costly repair bill, and loss of hire to boot.

As a relatively new risk it is not an event that is unlikely to be specifically covered by hull insurance but this is changing and this month Beazley has launched its Cyber defence for marine cover.

The new product covers both physical damage to the vessel and loss of hire, up to a maximum limit, and designed to either sit alongside existing hull cover or as a standalone policy.

Hull product

Keith Broughton, an underwriter for Beazley, explains to Seatrade Maritime News: “It’s a hull product, it’s designed to sit alongside your standard hull wordings, specifically the Institute of Hull Clauses. It’s a named peril clause and the idea being is that we want remove the uncertainty around a level of ship operations and therefore what we are intending to do is provide protection for a cyber-event, so something that interferes with the running of the vessel that results in it running aground or another issue.

“We’re also going to provide limited loss of hire so if you lose the use of vessel.”

The new cover comes ahead of a move by the IMO to include cyber risk management as part of ISM certification from 1 January 2021 as the shipping industry increasingly recognises the cyber threats that it faces.

“Everything is interconnected and we have to confront these problems,” Broughton says.

USB sticks and ECDIS

The perils of updates from USB sticks to ECDIS systems introducing viruses into the navigation system have been well reported and are real threat. Contact with vessel systems from ashore, for example in managing the engine could introduce the problem. Or someone could simply think it is amusing to move the vessel’s GPS position.

The introduction of a virus or malware may not be immediately apparent. “Just because it in the system the malware may not manifest itself immediately and with all these things it will manifest itself just when you don’t want it to,” he states.

“The point is if you lose the displays for navigation system and you’re coming in towards land or a narrow point you’re in danger.”

Reducing risk 

For those owners looking to buy the cover there is a questionnaire to be filled out. Following this should they accept the quote for cover Beazley has a service agreement with classification society DNV GL who look at current management systems, both on and offshore, training levels, and provide guidance and penetration tests. Results are provided to the owner via an online portal with recommendations on what to do next to reduce their risks of a cyber event.

Although the new product has been only launched for two weeks Broughton says interest has been “phenomenal”.

Posted 29 May 2019

© Copyright 2019 Seatrade (UBM (UK) Ltd). Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Seatrade.

Marcus Hand

Editor, Seatrade Maritime News

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