IP: Millennium Bug fears in Japan

[Dave Farber <farber () cis upenn edu>]

Date: Fri, 06 Mar 1998 20:02:56 +0900
To: farber () cis upenn edu
From: Ted Nelson <ted () xanadu net>






Wary Japanese Fear Millenium Computer Bug
By Hideyuki Sano
2-23-98


TOKYO (Reuters) - Many Japanese insurers are trying to make it clear they do
not feel 
obligated to make payouts on accidents triggered by computer software
failures 
that may take place on the first day of the year 2000. 
  
Some say the potential risks of ``millenium bugs'' are too big for them to
take. 
The problem seems simple. Because many older computers worldwide recognise a 
year by a two-digit number, ``98'' for 1998 for example, they could confuse
the year 
2000 with 1900, both represented as ``00.'' 
  
Such computers, not being ``millenium compliant,'' could suddenly lose track
of 
time at midnight on December 31, 1999. Some could stop functioning. Others 
might miscalculate data. The repercussions could be significant, involving 
computer chips now used in everything from jumbo jets and nuclear power 
plants to answering machines and televisions. 
  
Insurers, trying to sort out where risks exist and how to cope with them, say
many 
businesses will be affected. An aircraft with a suddenly malfunctioning
computer 
could lose its bearings. A failure of air traffic control computers could
make it 
worse. Indeed, the U.S. General Accounting Office has reported that the
Federal 
Aviation Administration is behind schedule in fixing its computers, including


those handling air traffic control. 
  
A warehouse with computerised air conditioning might fail to keep frozen
foods 
at appropriate temperatures. Such problems would cause other sorts of
headaches 
as well. There would likely follow a sharp rise in litigation, with various
parties 
blaming each other for economic losses, insurers said. Are insurers obligated
to 
pay for losses caused by these millennium-based computer failures? Many say: 
``Basically, no.'' ``Insurance is to cover unforeseeable damages and losses.
The 
millennium bug has been known for some time, so most of the problems could 
hardly be seen as insurance-covered accidents,'' one insurer said. 
  
They also claim it is extremely difficult to calculate the risk involved with
the bug 
because it is a one-off event with which they have no experience, rather than


accidents such as fires that occur at a certain probability over the long
term. Some 
insurers said they are already excluded from making payouts without any
changes 
in their contracts because the problem is expected, even predicted, rather
than 
accidental. 
  
But Kazuto Baba, general manager of the Marine Department at Yasuda Fire & 
Marine Insurance Co Ltd, said: ``At present, for instance, many marine


insurance 
contracts cover all accidents regardless of reason. So, with the contracts we
have 
now, even if a ship gets stranded because its computer does not work
properly, we 
cannot exclude it.'' 
  
Baba, who said his company is studying the insertion of an exclusion clause
into 
its contracts, said: ``If a plane crashes, it is difficult to single out a
specific cause and 
prove it.'' The fact that most non-life insurance contracts are renewed
yearly sets 
the deadline for insurance companies to find answers by the end of this year
at the 
latest, they said. Their worries may not disappear even then, however,
because 
nobody fully comprehends the scale of what might happen to computers around 
the world until the day comes. ``I fear I may not have a normal holiday on
New 
Year's Day in 2000,'' one insurer said.  






________________________________________________________
Theodor Holm Nelson, Visiting Professor of Environmental Information
Keio University, Shonan Fujisawa Campus, Fujisawa, Japan


http://www.sfc.keio.ac.jp/~ted/    PERMANENT E-MAIL: ted () xanadu net
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