Insurers attacked over Y2K exclusions

Xerox, Microsoft, others, thought to have contested claims worth $Millions

A string of top US firms have filed hundreds of millions of dollars worth of millennium bug claims in court against their insurers in a move that threatens to expose the entire industry to billions of dollars in claims. Research published by boutique investment bank Fox-Pitt, Kelton says that three corporates have filed $598 million of contested claims against a range of insurers. The firms are copier giant Xerox, telco GTE and computer firm Unisys. The claims, revealed in the London Evening Standard, come as a surprise. In the run up to the millennium, insurance firms had repeatedly claimed that the millennium bug was in principle uninsurable as it was a foreseeable event (although some of the consequences of a bug failure were covered). To aid their cause insurers devised specific millennium bug related exemptions. Other firms are understood to made claims include a subsidiary of JP Morgan the investment bank and Microsoft. There is no evidence yet of any bug claims being made in the UK. Official bug buster Action 2000 said it "was not aware of any claims being made in the UK". Fox-Pitt, Kelton, which is owned by re-insurer Swiss Re, estimates insurers could be exposed to as much as $77 billion in claims. ®