Cyber Insurance Provider Files for Insolvency, Leaving Brokers and Policyholders Uncertain
The cyber insurance landscape has been shaken by the recent filing for insolvency of Cogitanda Dataprotect AG. The German company, which had carved a significant niche in the rapidly growing market for cyber risk coverage, filed for insolvency with the Cologne District Court earlier this week. This unexpected event has triggered widespread concern among brokers and policyholders alike, raising several critical questions about the future of existing policies and potential claims.
Waiting for Answers: Confusion and Uncertainty Reign
Legal experts are advising brokers and clients to exercise caution and avoid hasty decisions in the wake of Cogitanda’s insolvency. Attorney Vincent Jacobsen, from the Hamburg law firm Michaelis, emphasizes the lack of precedent in a case of this magnitude within the cyber insurance sector. He urges all parties to await further clarity before making any significant moves.
A key point of contention is whether policyholders now have a special right to terminate their contracts with Cogitanda. Jacobsen asserts that, based on current understanding, such a right doesn’t automatically arise from the insurance contract itself. He cautions against attempting to derive this right from broader civil law regulations, noting the inherent legal uncertainty until the situation is fully resolved.
“The actual insurance contract doesn’t exist with Cogitanda,” clarifies Jacobsen. “Behind all Cogitanda covers, there are consortia in the form of open co-insurance arrangements. This means there are regularly independent and separate insurance contracts with the named insurers in the insurance certificate to the extent of the stated participation quotas .”
What Happens to Existing Policies?
Cogitanda structured its insurance offerings through this consortium model, partnering with other established insurers such as two Lloyd’s syndicates, Sparkassenversicherung, Versicherungskammer, and Württembergische. This structure offers a glimmer of hope for policyholders, as their coverage may continue through these partner insurers.
Jacobsen foresees a high likelihood that both current and extended insurance contracts will remain valid and continue to provide protection to policyholders. However, he emphasizes the need for transparency and communication. Brokers are advised to proactively inform their clients about the situation, keeping them apprised of any developments and updates.
The Road Ahead: Navigating Uncertain Terrain
While the immediate future remains uncertain, a Frequently Asked Questions (FAQ) document is anticipated from Cogitanda to provide further guidance to brokers and policyholders. Until then, patience and a wait-and-see approach are crucial.
Brokers are having to tread carefully, balancing the need to reassure clients with the lack of concrete answers. They are urged to focus on clear communication, avoiding any actions that might inadvertently breach agreements or jeopardize coverage.
The magnitude of Cogitanda’s insolvency throws a spotlight on the complexities inherent in cyber risk coverage. While the ultimate outcome remains to be seen, this situation presents a valuable opportunity to review existing policies, clarify coverage details, and ensure comprehensive protection against the ever-evolving landscape of cyber threats.
What legal recourse do policyholders have in the event of Cogitanda’s insolvency, specifically regarding the termination of contracts?
## Cyber Insurer Insolvency: A Conversation with Legal Expert Vincent Jacobsen
**Interviewer:** The cyber insurance world has been rocked by the recent insolvency filing of Cogitanda Dataprotect AG. Attorney Vincent Jacobsen, thank you for joining us today to help shed some light on this complex situation.
**Jacobsen:** It’s a pleasure to be here. As you mentioned, Cogitanda’s insolvency is unprecedented in the cyber insurance sector, leaving brokers and policyholders in a state of understandable confusion.
**Interviewer:** What are the immediate concerns for those who have policies with Cogitanda?
**Jacobsen:** The most pressing question is the fate of existing policies and potential claims. Unfortunately, there is no easy answer as of yet. The lack of precedent in such a scenario makes it difficult to predict the outcome.
**Interviewer:** Some policyholders are wondering if they have the right to immediately terminate their contracts with Cogitanda.
**Jacobsen:** That’s a common question, but the answer isn’t straightforward. Typically, insurance contracts don’t automatically grant a right to terminate based on the insurer’s insolvency. While some might try to argue for such a right using broader civil law regulations, it’s a complex legal issue that requires further clarification. At this stage, I urge caution against making any hasty decisions.
**Interviewer:** Can you explain what you mean by “open co-insurance arrangements”?
**Jacobsen:** What many people don’t realize is that Cogitanda didn’t directly underwrite all the policies itself. Behind every Cogitanda cover, there were consortia consisting of multiple insurance companies participating in an open co-insurance arrangement. This means there are individual contracts between the policyholder and each participating insurer, adding another layer of complexity to the situation.
**Interviewer:** This sounds incredibly complicated. What’s the best course of action for brokers and policyholders right now?
**Jacobsen:** The most prudent approach is to wait patiently for further information and legal clarification. It’s crucial to avoid making any decisions based on speculation or incomplete information. Consulting with a legal expert specializing in insurance is highly recommended in navigating this complex situation.
**Interviewer:** Thank you, Attorney Jacobsen, for providing your valuable insights during this uncertain time. We hope that clarity will be forthcoming for all affected parties soon.
