Insurer tries to get out of Sony payments

One of Sony’s insurers has gone to court to ask for a ruling so it doesn’t have to pay to defend the outfit from the class-actions and other lawsuits which have resulted from the recent hacking scandal.

Sony was turned over by hackers who managed to make off with huge amounts of personal data, including credit card details.

Zurich American Insurance has asked a New York state court to rule it does not have to defend or payout in any claims “asserted in the class-action lawsuits, miscellaneous claims, or potential future actions instituted by any state attorney general.”

The outfit is also suing Sony’s other insurers, Mitsui Sumitomo Insurance, AIG and ACE. It appears that it wants the others to take the can for paying out in the Sony case. Zurich has asked the court to clarify the other insurers responsibilities under the policies they had written for Sony.

Reuters quoted digital lawyer Richard Bortnick as saying that Zurich doesn’t think the small print in its coverge means that it has to defend Sony. However, there might still be a duty to defend and it wants to make sure all of the insurers with a potential duty to defend are contributing,

Sony may be able to claim there was property damage as a result of the data breach, Zurich will claim that its general liability insurance it wrote for Sony was never intended to cover digital attacks.

In May, Sony said it was looking to its insurers to help pay for its massive data breach – which it claims will cost $178 million.

The situation highlights a big problem: that the insurance industry needs to come up with reasonable premiums to cover hacking cases like this. In the Sony case there is the small matter of how much security was in place to stop hacking, to begin with.

The insurers could argue that placing data on unprotected servers on the internet is an invitation to be hacked, and they would have charged more in premiums if they knew.