Y2K claimants here already

The ramifications of the millennium bug are already hitting insurers, says Crawford Adjusters Canada vice president Glenn Gibson, who recently addressed a capacity crowd at the SCOR Canada/Lang Michener Claims Symposium in Toronto.

Already in the U.S. – where the bulk of Y2K litigation is currently taking place — over 200 lawsuits have been settled between Y2K affected companies and software manufacturers. These settlements have included payments in the range of $1 million to $10 million. Already, some of these defendants are looking to their insurers to cover liabilities, he adds.

Gibson points to one lawsuit in which an American hospital is suing its software manufacturer for $1.2 million to cover the costs of upgrading their non-compliant systems. Cincinnati Insurance Company, which underwrites the software manufacturers liability policy, is embroiled in the suit and has defended its decision to refuse to indemnify the manufacturer. While a decision on the matter is not expected for twelve months, says Gibson, insurers across the continent, particularly those that have not implemented wide-ranging Y2K exclusion policies, are carefully monitoring the situation.

Gibson acknowledges there are a multitude of predictions surrounding Y2K, many that could ultimately be unfounded. “But the problem is real. The world market would not be spending billions of dollars to correct a problem that does not exist,” he warns. What is questionable though is the exact area most threatened, he adds. One serious area of concern he maintains is directors’ & officers’ liability, noting a recent Canadian Press article quotes Canadian stock market regulators who are displeased with the high numbers of public companies keeping investors in the dark regarding their Y2K preparation.