A Mixed Bag for Chicken Little: Analyzing Year 2000 Claims and Insurance Coverage

A visitor from another planet reading the popular and insurance trade press would probably conclude that the world stands on the abyss of a business, tort, and insurance crisis of unprecedented proportion. Media coverage of an impending Year 2000 “crisis” has reached a fevered pitch, with predictions of both a gigantic volume of Year 2000 claims and a correspondingly large amount of insurance coverage litigation. Many predict that the Year 2000 problem (also known as the “Y2K” or “Millennium Bug” problem) will create coverage controversies and costs dwarfing major insurance battles of the late twentieth century such as those concerning coverage for asbestos claims, pollution, toxic torts, CERCLA and government-ordered pollution remediation, biomedical devices, and other long-tail product liability. Against this backdrop, it is all but impossible not to recall the venerable children\u27s parable of Chicken Little, who claimed the sky was falling. Unlike the original Chicken Little episode, the lurking Year 2000 problem is one that cannot be easily dismissed. Although the United States technology industry has been comparatively aggressive in attacking the problem, other nations have apparently been more lackadaisical. And, unlike the case of the original Chicken Little, there is no real harm in taking the problem very seriously. Even if the consequences of computer data misreading are not catastrophic, they are serious enough to require correction if contemporary business is to continue to function in the twenty-first century. While it is in theory possible to spend “too much” correcting the problem by diverting resources (e.g., paying overtime), no one is arguing that the Y2K fix is unnecessary. Where the computers at issue control weapons, dangerous substances, or traffic, the stakes are high. Although the Year 2000 problem is serious, it is important to remember that to date, as several observers have noted, the number of articles written about the Year 2000 matter dwarfs the handful of lawsuits actually filed. Although it may seem a truism, because the Year 2000 has obviously yet to arrive, the potential for Y2K mishaps has existed since the mid-1990s because of credit card validity periods, mortgage loan periods, and the like ending in the twenty-first century. Although the worst is certainly yet to come, there have already been many opportunities for computers to misread two-digit codes beginning with “0” (zero) but there has been little dramatic business loss or substantial insurance coverage litigation. Unless the “real” arrival of the Millennium Bug is dramatically more pronounced than its toddler years, the Y2K problem would appear to be less catastrophic than many suggest