Time deductible
A downtime threshold below which no indemnity is due under contingent business interruption cover, often eight to twelve hours.
The waiting period is a deductible expressed in time: below it, a service interruption gives rise to no indemnity. The market most often sets it between eight and twelve hours, by convention, with no actuarial study of the distribution of outage durations, and yet it becomes the variable that weighs most on catastrophic cyber exposure. Downtime durations concentrate between a few hours and a day, exactly where the threshold sits. Moving it by four hours shifts the loss by an order of magnitude, where one might have expected a 20% swing. The insured loss from a hyperscaler outage therefore depends less on the event than on this clause.
Textbook case: a cloud outage of fifteen to sixteen hours against a waiting period of eight to twelve produced insured-loss estimates from 38 to 581 million dollars, a factor of fifteen.
Follow the research
One letter a week. First, the week's underwriting note, when one is published: a dated, argued decision, signed by Paul Bernardski. Then what the observatory published on cyber risk, political risk and insurance. No account, no tracking.
No spam, one-click unsubscribe, no data ever sold.