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UPDATE 1-AIG to update casualty insurance to include cyber coverage

(Adds context, details about cyber insurance)

Oct 26 (Reuters) - American International Group Inc said it will begin revising all commercial policies to include cyber coverage in January, a move that will boost rates but make it clearer how customers are covered if they are the victim of a security breach.

The change, which will trigger rate increases, is part of the insurance giant's effort to shift from issuing policies that do not specify whether cyber losses are covered, said Tracie Grella, AIG's Global Head of Cyber Risk Insurance, while on the sidelines of a cyber risk conference in New York on Thursday.

Cyber coverage is a mounting concern for companies worldwide as hackers increasingly take aim at their technology systems.

In September, Equifax Inc, a provider of consumer credit scores, disclosed that cyber criminals had breached its systems between mid-May and late July and stolen the sensitive information of 145.5 million people. The hack is among the largest to occur.

Insurers are also struggling to estimate their potential exposure to cyber-related losses amid mounting cyber risks and interest in cyber insurance.

Cyber insurance can be a tricky area for companies to navigate because of exclusions, gaps and coverage limits, insurance experts say. Commercial insurers offer stand-alone cyber coverage, separate from other property and casualty policies, but cyber coverage is not yet a standard addition to most other policies.

AIG unveiled a property policy in April that specifically includes cyber coverage, Grella said.

Adding cyber coverage to other types of policies will mean higher rates, Grella said. "When you buy affirmative cyber coverage, you should be paying for it," Grella said. (Reporting by Suzanne Barlyn; Editing by Phil Berlowitz)