The future of cyber claims

While commercial cyber insurance coverage has evolved over the last few years to meet ever-changing risks, personal cyber insurance is providing insurers with new a new market opportunity.

Cybercrime is impacting individuals at an alarming rate, providing insurers with an opportunity to develop new personal protection options for this market. (Photo: Shutterstock)

Cybercrime is an estimated $600 billion enterprise. While commercial insurers understand the threat posed to companies and provide products in response, individuals are exposed to more risk than ever before.

To address these issues, personal insurers must provide effective coverage and loss prevention services for these new risks. And as new threats emerge — from cybercrime and cryptocurrencies to autonomous driving and other developing technologies — the future of claims is also changing.

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A recent Intel Security study showed that 97% of people presented with a series of emails were unable to differentiate safe ones from their harmful counterparts. As our world becomes more digitized, people must understand the risks and how to protect themselves.

The exploitation of real estate transactions has become a popular trend for cybercriminals. During a recent home purchase, a policyholder fell victim to cybercrime after receiving a spoofed email. The email appeared to come from the seller’s attorney and provided wire transfer instructions, which the policyholder followed to wire nearly $1 million. By the time the fraud was discovered, the account had been closed and the funds were gone without a trace.

Ransomware attacks have also become more advanced. Shadow Brokers, a highly organized hacker group, successfully breached the NSA, stealing tools that enabled them to access the systems of corporations and governments across the globe including FedEx, hospitals, oil companies and thousands of other enterprises. It is possible that Shadow Brokers also sold these tools on the Dark Web to other countries and organizations with nefarious intentions.

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As cybercrime continues to evolve, so must the tools insurers implement to help manage risk and reduce the impact of the resulting claims.

ID theft monitoring and restoration services

There were more than 15 million identity fraud cases in the U.S. in 2016, costing Americans more than $16 billion. Registering for services that not only monitor for identity theft, but also help individuals recover from it is crucial.

Active cyber threat monitoring solutions

The security measures in place for most home networks often pale in comparison to those enforced by workplaces, making the home network a major vulnerability. Additionally, the growing connectivity of smart home technology, including smart thermostats, voice assistants, security systems and other internet-connected devices greatly increase risk.

Services like Rubica provide 24/7 active monitoring across a home network to block malware and phishing scams. These services also investigate suspicious activity, patterns and behavior and notify individuals when action is necessary. Some will even warn of unsafe behaviors, such as entering a password on an insecure website.

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Insurance coverage  

While addressing cyber risks has been a focus in the commercial insurance space lately, personal insurers have been slow to keep pace. Until recently, coverage did not exist that would respond to fraudulent wire transfers, like the scenario mentioned earlier.

A number of insurers are creating products to meet this market need, and the response has been extremely positive, confirming the importance of coverage like this in the market. Personal insurers must continue to evolve their product offerings to address the ever evolving risk landscape.

Mike Taylor (Metaylor@pureinsurance.com) is senior vice president/chief claims officer for Pure Insurance.