by Dawn Illing, PropertyCasualty360.com, December 14, 2017
Businesses Will Start to See Security as a Key Commercial Risk Rather than an IT Issue
While cyber attacks are deeply concerning, there's a silver lining for the insurance industry in 2018: opportunity. Here are several ways cyber risks will affect insurers in the coming year.
1. Businesses will start to get more serious about cyber insurance; premiums will inflate.
Cyber-insurance will continue to grow at a fairly steady pace as companies begin to adopt not an “if” but “when” mind set for attacks. A successful attack can cause major damage – not only to a company's bottom line, but to its reputation and consumer trust.
2. An increase in cyber attacks means more opportunities for insurers and advisors.
The variety of attacks and the technologies and processes deployed to prevent them will be noticeable in 2018, adding more confusion for companies. However, this will become an opportunity as businesses seek advice, and insurers become critical influencers in future buying decisions.
3. Moving insurance from risk protection to prevention.
Due to a growing awareness of cyber attacks, in 2018 businesses will start to see security as a key commercial risk rather than an IT issue that affects every facet of their business. A holistic process will begin to be adopted from the boardroom down to change cultures and take positive steps company-wide to protect digital systems.
4. The rate of security breaches will continue to increase.
Previously, a degree of blame has always been placed on the end-user when a breach occurred; however, companies will begin to adopt policies that make it easier to report breaches within the company. The focus will shift from how to respond to how to detect the breach. In turn, reinsurance support will grow in response to better data and tools, supporting the overall growth of the market.
These issues should also be considered for any portable device since 2018 is likely to see more breaches of these devices and the business data stored on them.
5. Fear of a breach builds business opportunity.
As regulation increases, banks and insurers will require systems that are quick to evolve and can keep up with changes. Therefore, buy-in to technology will increase as institutions find it increasingly difficult to stay ahead and readjust to ever-evolving risks and regulatory landscapes.
6. RegTech to the rescue?
Three major areas related to regulation will be the key focus for the next two years: Data security, data privacy and cyber security.
Insurers will continue improving their ability to harness data while also re-establishing trust with customers by offering a better customer experience. The benefits of a digitally transformed client lifecycle management process are very compelling such as:
- Faster on-boarding
- Efficient remediation
- Digitalization of data management and integration.
If companies are able to cut their compliance costs by leveraging technology and overcoming these challenges, this will become an even bigger driver during marginal compression.
However, will technology hinder good judgement and human input on risk management decision-making processes? Only time will tell.