Cybersecurity, an overriding aim for insurance in 2018

First and foremost in the risk-list for all companies in 2018 is cyber-attacks. Insurance carriers are targeted by hackers, and are also required to “protect” and support businesses as well. Thus deals on this front can only grow

Published on 07 Feb 2018

Accordingly to EconomyUp, 2017 was a difficult year for cyber security and 2018 got started even worse, with an international alarm following the complaint, by a group of researchers, of a leak, for at least ten years (perhaps even more), in the processors of the main devices worldwide (PCs, smartphones, tablets, etc.). Strictly speaking, two types of vulnerability have been identified: the first one, Meltdown, involves the processors made by Intel; the second one, Spectre, instead involves the processors made by Arm and Amd, in addition to those of Intel, and was discovered by Project Zero, Google team.

Apple confirmed the presence of these anomalies. The Cupertino company actually has admitted that “all Mac systems and IOs devices are affected by security issues known as Meltdown and Spectre”.

All of us here are at risk, especially companies. Only in Italy, according to data released by the Postal Police, the cyber threats against national key infrastructures last year have increased by five times compared to 2016. In detail, around 28,500 hacker alarms were triggered, while the actual attacks hit 1006.

2018 will therefore be the year in which the companies will have to seriously take the problem.

ICT security engages the insurance industry in two ways: like all companies, even the insurance carrier risks cyber-attacks, probably, among the categories of companies, is the most exposed, given the huge amount of data hold making it very attractive to the prowlers. In addition, new policies models related to the Internet of things, for example smart home devices, suffer the fact that these new types of devices are inherently vulnerable.

On the other hand, policies against cyber risk are a huge business opportunity for the companies.

Maria Bianca Farina, president of Ania, has recently emphasized:

“So far we have managed cyber risk with reference to corporate clients that first began to think about the risks that may derive from it. However, the topic is becoming relevant also for other sectors such as, for example, retail. This is why we are analyzing insurance contracts that are expected to undergo a great evolution. Suffice it to say that the global annual cost related to computer fraud is estimated at between $100 billion and $1 trillion and the average cost of an accident would be between $2 and $4 million. Moreover, these risks could have the impact of about half a percentage point on the US GDP or one point on the German GDP. According to the Insurance Information Institute, cyber risk premiums will double in a short while, reaching 7.5 billion by 2020”.

UK Aon, operating in financial services and IT security, has recently published ‘2018 Predictions: Trends in Cybersecurity‘ which highlights how, in addition to the growing and almost uncontrolled threat that is occurring, we have got the situation in which the Chief Risk Officer will become a key player in companies, as the computer threat will lose its current somewhat marginal role, to be fully included among the main business risks. Company executives are now finally aware of the seriousness of the risks (including reduced earnings, operational interruptions and complaints against directors and officials) and will batten down the hatches, by signing specific and tailored cyber risk policies rather than relying on “silent” elements included in other policies. The adoption of cyber risk policies will extend beyond traditional buyers, to the retail, financial and healthcare sectors, to production, transportation, public services and so on.

“In 2017, hackers wreaked havoc with a series of activities, from phishing attacks that have influenced political campaigns to cryptoworms ransomware that snuck into operating systems on a global scale. With the growth of the Internet of Things (IoT), we have also witnessed the proliferation of distributed denial-of-service (DDoS) attacks on IoT devices, which paralyze the functionality of the device.” , said Jason J. Hogg, CEO of Aon Cyber Solutions. “In 2018, a broader cybernetics exposure is expected due to the convergence of three trends: first, the growing appeal by companies to technology, secondly, the intensification of consumer data protection and, thirdly, the increasing value of non-physical activities”.

The problem of cyber security is naturally global, and the growth trend of cyber risk policies will be equally global. For example, in India the “boom” has already been felt: in 2017 the market has grown by 50%.

Insurance Information Institute has predicted that cyber risk premiums will reach € 7.5 billion by 2020.

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