(Changes dateline; adds Sony comment in paragraphs 5, 12)
* 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
By Ben Berkowitz
NEW YORK/TOKYO, July 22 One of Sony Corp's
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 this year.
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.
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."
A Sony spokesman in Tokyo said his company does not comment
on pending litigation.
Zurich American, a unit of Zurich Financial Services
, also sued units of Mitsui Sumitomo Insurance, AIG
and ACE Ltd , 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.
AIG declined to comment, and Mitsui Sumitomo could not
immediately be reached.
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.
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 measures. The
company said the figure does not include potential compensation.
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 breach.
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 and Taiga Uranaka in Tokyo; Editing by Ted
Kerr and Chris Gallagher)