The insurance industry impact from the Microsoft 365 service disruption is projected to be minimal, mainly given the uneven nature of the disruption and the likelihood that most losses will be limited to short-term productivity and operational delays, according to a recent Marsh Re report.
While the incident caused widespread operational friction, both reinsurance broker Marsh Re and analysts at Morningstar DBRS anticipate that the financial fallout for the insurance market will be contained, largely consisting of short-term productivity delays rather than sever, revenue-halting interruptions.
While the broker does not provide a figure, given it is still very early days, Morningstar DBRS has estimated the global insured loss at between USD 300 million and USD 500 million.
“The event was a significant, uneven disruption with broad exposure, not a full outage, cloud failure, or cyberattack. Exceeding 12 hours, it may trigger business interruption losses for reliance on critical operations, but overall insurance market impact is expected to be minimal due to short-term productivity delays,” Marsh Re stated.
The incident was a significant Microsoft 365 service disruption, so not a complete outage, involving the temporary unavailability or degraded performance of operational servers supporting dependent services.
Impact varied by service, function, region, and tenant, with some features remaining available while others experienced access failures or delays.
As per Marsh Re, Outlook and Exchange Online experienced the clearer disruptions alongside secondary impacts across Teams, SharePoint, OneDrive, Microsoft 365 Copilot, Microsoft Defender XDR, Planner, To Do and connectors used by external AI services such as ChatGPT and Claude.
By November 13 at 8:00 am ET, services appeared to be broadly recovering, although residual intermittent delays persisted.
According to Marsh Re, public reporting found no evidence of unauthorised access, data exfiltration, or malicious encryption, with the event appearing to stem from a technical failure rather than a deliberate attack.
For the affected businesses, insurance claims deriving from the disruption will come with some hurdles. For example, standard cyber policies often respond to contingent business interruption from third-party vendor outages, provided the disruption exceeds specific waiting periods, typically averaging four hours for smaller firms and 12 hours or more for larger ones.
However, policy holders must also prove an actual loss of net profit, which is difficult when disruptions are primarily limited to internal communications and email access, Marsh Re analysts explain.
Furthermore, policy wording regarding non-malicious events varies significantly across the market.
Mario de Cicco, VP, European Financial Institutions, Morningstar DBRS, said the following on the incident: “The Microsoft outage could result in a number of insurance claims, mostly related to businesses experiencing financial losses, operational disruptions, and delays in serving customers.
“However, not all businesses will automatically be entitled to compensation, as this depends on the terms and conditions of their insurance policies. Some cyber insurance policies only cover losses caused by malicious cyberattacks, whereas the Microsoft outage appears to have resulted from a technical failure rather than a deliberate attack. Additionally, some policies include waiting periods before business interruption cover becomes effective.”
According to de Cicco, insurers’ ultimate financial responses will hinge on specific policy mechanics, including deductibles, sublimits, and exclusions, meaning economic losses falling outside those strict parameters will be absorbed directly by the affected business.
“In our view, the overall credit impact of the Microsoft outage on insurers is likely to be limited, with global insured losses estimates at USD 300 million to USD 500 million, well below the CrowdStrike outage estimates. This reflects the potentially limited coverage under existing cyber policies and exclusions for nonmalicious tech failures. However, this remains a preliminary estimate given the ongoing nature of the outage and the uncertainty surrounding its ultimate duration and overall impact,” de Cicco concluded.
For comparison, CyberCube, a provider of cyber risk analytics for the insurance industry, reported previously that the CrowdStrike event resulted in insurance industry losses between USD 400 million and USD 1.5 billion.
