* Zurich American sues in New York state court
* Also sues some of Sony's other insurers
* Data of more than 100 million users hacked in April
(Adds background, expert comment)
By Ben Berkowitz
NEW YORK, July 21 One of Sony Corp's (6758.T)
insurers has asked a court to declare that it does not have to
pay to defend the media and electronics conglomerate from
mounting legal claims related to a massive data breach earlier
The dispute comes as demand soars for "cyberinsurance,"
with companies seeking to protect themselves against customer
claims and associated costs for data and identity theft.
How to write such policies has become a huge subject of
debate in the insurance industry. [ID:nN13141787]
Zurich American Insurance Co asked a New York state court
in documents filed late on Wednesday to rule it does not have
to defend or indemnify Sony against any claims "asserted in the
class-action lawsuits, miscellaneous claims, or potential
future actions instituted by any state attorney general."
Zurich American, a unit of Zurich Financial Services
ZURN.VX, also sued units of Mitsui Sumitomo Insurance, AIG
(AIG.N) and ACE Ltd ACE.N, asking the court to clarify their
responsibilities under various insurance policies they had
written for Sony.
"Zurich doesn't think there's coverage, but to the extent
there may be a duty to defend it wants to make sure all of the
insurers with a potential duty to defend are contributing,"
said Richard Bortnick, an attorney at Cozen O'Connor and
publisher of the digital law blog CyberInquirer.
Bortnick, who is not involved in the case, said that while
Sony may be able to claim there was property damage as a result
of the data breach, Zurich is likely to argue that the sort of
general liability insurance it wrote for Sony was never
intended to cover digital attacks.
Sony could not immediately be reached for comment. AIG
declined to comment, and Mitsui Sumitomo could not immediately
In April, hackers accessed personal data for more than 100
million users of Sony's online video games. Sony has said it
could not rule out that some 12.3 million credit card numbers
had been obtained during the hacking.
In May, Sony said it was looking to its insurers to help
pay for its massive data breach. [ID:nN05241925]
Sony has said it expects the hacking to drag down operating
profit by 14 billion yen ($178 million) in the current
financial year, including costs for boosting security
55 SUITS TO DATE
Zurich American, in its court papers, said 55 purported
class-action complaints have been filed in the United States
against Sony. The insurer also said Sony has been subject to
investigations by state and federal regulators since the
Zurich American has subsequently received claims for
coverage from Sony under its policy, a commercial general
liability policy written for Sony Computer Entertainment of
America as of April 1.
The insurer said it does not have any obligation to defend
any other Sony unit under that primary policy, since it only
applies to the specific business in question.
In addition, Zurich American said its policy only covers
the Sony unit for "bodily injury, property damage or personal
and advertising injury." It said no such claims have been made
in any of the class-action lawsuits.
Even if such claims had been made, Zurich American said,
the policy had exclusions in place that would deny Sony
coverage for the claims made.
The case is Zurich American Insurance Co and Zurich
Insurance Co Ltd vs. Sony Corp of America et. al, Supreme Court
of the State of New York, No. 651982/2011.
(Reporting by Ben Berkowitz, additional reporting by Liana
Baker in New York; Editing by Ted Kerr)