Jillian Kestler-D'Amours
News
Cyber experts at CIFF: insurers could do more over digital threats | Canadian Insurance
www/news

Cyber experts at CIFF: insurers could do more over digital threats

"Could affect entire portfolios"

Cyber experts at MSA’s Canadian Insurance Financial Forum this week say the breadth of new technologies presents changing, digital risks that may impact all areas of insurance.

“It’s a peril that could affect entire portfolios of insurance,” Jacqueline Detablan, vice-president of professional liability at AIG, told a panel discussion at the conference. Insurers are currently providing traditional, digital risk insurance, or “how to deal with a cyber breach when it happens.”

Detablan says the last two years have seen significant growth: the market for cyber insurance is increasing at about 30 percent annually, and totalled about $2 billion globally last year.

But an area that insurers haven’t completely covered is how to protect companies against intellectual property loss or damage to their brand’s reputation as the result of digital breaches. These can include hacking personal or financial data to longer-term fraud schemes.

Right now, insurers cover immediate financial losses, or the cost of hiring public relations firms to rehabilitate a company’s image, or extra expenses to maintain operations, as a result of breaches, but  Detablan says“there’s still a way to go.”

Another major question mark is how pricing models may change for things that may now be exposed to cyber crimes.

One example is the impact of growing networks of digitally-enabled products that carry loads of data, said Daniel Shum, partner and national insurance leader at Deloitte. The so-called “Internet of Things” can now include cell phones, vehicles, buildings and appliances.

When organizations start using data-heavy devices in their businesses, there is not only a risk of hacking, but social-engineered incidents are also possible, and Shum says “that is unique for insurers to handle from a cyber crime perspective.” A vast, interconnected system also means that one weak entry point is all hackers need to penetrate your entire system, making it even more difficult for insurers to set prices. “As [Internet of Things] evolves and changes the dimensions of cyber risk, it makes it more difficult for insurers to price the product because it’s really changing the dimensions of what risks are out there.”

Managing last generation assets and streamlining the multiple digital systems insurers use is critical to creating a more digitized industry, says Bill Pieroni, president and CEO of ACORD, a non-profit that works to improve data quality and information exchange in insurance. He argues that’s even more important than integrating newer technologies immediately, such as Blockchain, an encrypted digital ledger that minimizes the risk of hacks.

Top of the agenda for insurers over the next decade, says Hum, should be “how do I take this technology and turn it back upon the consumer and give them really what they want, which is a much easier way to interact with us.”

Pieroni, meanwhile, says technology would make aggregating, visualizing and screening vast pools of digital data faster, cheaper and easier to integrate. “I think that can have a profound impact. It’s more than the technology, though; you need the right people doing the right thing with the right data at the right time.”