Insurers cover shipowners against threat of ‘modern piracy’ (source Tradewinds)

Digitalisation is putting ships at risk from cyber attack

By Adam Corbett

New insurance policies are coming into the market to protect fleets from the threat of cyber-attacks.

According to UK law firm Clyde & Co, which has dubbed the threat of cyber-attacks on ships a “modern form of piracy”, the increasing digitalisation of on-board technology is adding to the threat.

High-profile cyber raids on AP Moller-Maersk, Cosco and CMA CGM have largely targeted shore operations, but the law firm said that threat is shifting to the sea.

In a series of papers, it highlighted the technology that could be targeted: “Systems affecting the navigation of the vessel, such as ECDISs [Electronic Chart Display and Information Systems] or AIS, may be attacked to facilitate piracy, criminal or terrorist objectives.”

As the threat to ships grows, the International Maritime Organization will require owners to include measures to protect against cyber-attack in on-board safety management systems (SMS).

Still not convinced?

At the same time, primary and reinsurance underwriters are introducing cyber-exclusion clauses to mainstream marine insurance policies, such as hull and machinery, and war risk, opening the door for supplementary cyber policies.

Sigco was one of the first to offer a cyber policy for hull and machinery in 2019 and has now added cyber-related loss of hire insurance to cover the cost of delays caused by damage to a ship.

Many owners remain unconvinced of the need for cyber cover, so Sigco’s idea is to provide reasonably priced cover that is easy to arrange.

President Neil Clemens said: “We’ve [been] getting more enquiries now, we’re getting some momentum, which we are turning in to business.”

Steamship Mutual is the first protection and indemnity club to directly underwrite cyber business. P&I third-party liability cover usually includes cyber-attack, so the mutual has started a separate policy that covers shipowners.

Rupert Harris, chief executive of Steamship Mutual Europe, said: “We’re really focusing on what a shipowner has to do when his vessel is affected by a cyber-attack. They have to respond, isolate and repair, and these are issues that very much need to be embedded in SMS from 1 January.”