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Singaporean firms are looking towards cyber insurance as hacking becomes more commonplace
We live in a highly connected world where computer hacking, data breaches, and security failures have become increasingly commonplace. According to statistics released by the cyber risk solutions division of H.U. Dove & Company, an American provider of insurance services, the period from 2015 to July 2016 saw 6,333 reported data breaches in the US. The number of records compromised was a staggering 864 million.
With cybercrimes and hacking attacks becoming common, the cyber insurance market is growing rapidly. In 2014, gross premiums in the US stood at US$2bil. It is estimated that by 2020, this figure will climb to US$7.5bil
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Singapore’s StarHub becomes victim of a cyber attack
Source: Starhub
Recently telecom operator StarHub said that computers, routers or webcams in users’ homes were compromised by hackers and used to send massive volumes of data into the company’s domain name servers.
These servers convert domain names into machine readable IP addresses.
StarHub has over 470,000 residential broadband subscribers. The company says that its services were affected as a result of two attacks in the month of October.
Soon after StarHub discovered that its system had been compromised, it began getting in touch with customers and sending its technicians to their homes to install anti-malware software.
Cloud services provider Akamai’s chief security strategist John Ellis says, “What seems to be more probable is that devices were instructed to participate in an attack – which could have been targeted anywhere – and this went through StarHub’s [domain name servers] and overloaded the infrastructure.”
StarHub maintains that even though its customers’ computers and webcams were turned into “zombie machines,” to transfer data to the company’s servers, individual customer security was not compromised.
Spike in demand for cyber insurance
A survey of C-suite executives, risk managers, and IT decision makers conducted by AIG, a leading insurer in Singapore, has found that cyber risk is their greatest worry.
AIG’s Lai Yen Yen says that in the last three years AIG Singapore has seen enquiries for its cyber insurance policies increasing by a factor of seven. In 2016, it is expected the nation’s cyber insurance market will grow by 50%.
Cyber insurance can provide commercial entities and financial institutions with various types of coverage:
Protection against breach of corporate information
Insurance cover if a vendor loses confidential information for which the company is liable
Breach of data protection laws
Civil and criminal defence costs for regulatory investigation by a public authority
Cover is also available for dumpster diving (a technique used by hackers to retrieve information that can be used to attack a computer network), computer viruses, employee sabotage, theft of information, and identity theft.
MAS ties up with NTU for cyber insurance project
A few months ago the Monetary Authority of Singapore (MAS) and Nanyang Technological University (NTU) launched a joint initiative to lower cyber insurance premiums and standardise insurance policies.
The Cyber Risk Management (CyRiM) project will aim to make cyber insurance simpler for small and medium enterprises. It will also try to ensure that the policies offered by insurers do not set high deductibles (the amount that the insured party must bear before the insurer pays any expenses) and offer low coverage limits.
There is also a need to educate SMEs about the basic precautions they must take to protect themselves from hackers. Professor Shaun Wang, director of NTU’s Insurance Risk and Finance Research Centre says, “So we will be making some recommendations of best practices.
“For instance, they should have an inventory of key assets they want to protect, and formulate a crisis response if their IT system should be breached.”
The CyRiM project plans to initially target the financial services and healthcare sectors, both of which are prone to cyberattack because of the vast amounts of personal data that they hold. CyRiM will also work on creating reliable databases and analytical tools to help insurers to align their products with the requirements of buyers.
Rapid growth in cyber insurance is forecast
It is estimated that not even one in 10 Singapore companies currently holds cyber insurance. With the increasing levels of connectivity and the growing number of security breaches, it is likely that more companies will opt for this insurance cover.
AIG forecasts that by 2020, 40% of the nation’s businesses will take cyber insurance, making it among the fastest growing segments in the insurance industry.
(By Ravinder Kapur)
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