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Monday, November 16th
"By my count, there's less than 410 days left," Gass said. "And there's no reprieves." Gass spoke Monday at Fulfilling the e-Promise, the A.M. Best Co.'s annual insurance information management conference in Boston. Gass said insurers can get a handle on how their publicly traded insureds are coping with the Y2K bug by examining third-quarter federal Security and Exchange Commission filings. The SEC has released new requirements for companies to report the extent of their Y2K problems and the cost to mitigate them. Estimates for the cost of the Y2K bug are $300 billion to $600 billion worldwide just for COBOL language, Gass said. About 50% of the businesses worldwide are expected to miss Y2K compliance deadlines and 35% of United States companies have not even begun to assess exposure, Gass said. While the Gartner Group predicts 50%-70% of systems will fail, 90% of the failures will last for three days or less, Gass said. One legal issue Y2K wranglers will deal with is what triggers liability, what policy was in force at the time the liability was triggered and will insurance companies be protected by the statue of limitations. Gass suggested the following potential triggers:
"Or, as in the case of environmental claims, will there be a continuous trigger?" Gass said after his presentation. About 5% of embedded chips, those found in the machines that manufacture airplanes and automobiles, are expected to account for 30% of all Y2K costs. Fixing the errors involves replacing the two-digit date fields in millions of lines of computer code. The cost is estimated to be $1.10 per executable line of COBOL code, or could reach as high as $8.50 a line, Gass said. According to one survey, 44% of respondents have experienced Y2K software failures under actual operating conditions already. By Jan. 1, 2000, it's estimated that one in five companies won't have even started compliance activities, Gass said. Gass said companies can find some protection from liability under the newly enacted Y2K Information and Readiness Disclosure Act, which went into effect Oct. 10. That law allows companies to report their good faith efforts to become Y2K complaint while providing that the reports can not be used as evidence in court. Gass pointed out companies have a 45 day window to protect previous disclosure statements under that new law. "It may be worth the postage to do that," Gass said. "It may protect you from future lawsuits." |
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Time is running out for companies to nip the Year 2000 bug, said Ronald S. Gass, associate general counsel for the NAC Reinsurance Corp., Greenwich, Conn.