Tag Archives: IoT

What IoT Cyber Attacks Mean for Insurers

The massive global distributed denial of service attack (DDoS) against internet infrastructure provider Dyn DNS Co. that left over 1,000 major brand name sites including Twitter, Netflix, PayPal and Spotify, inaccessible Friday has implications for insurers too.

While the nature and source of the attack is under investigation, it appears to have been (in the words of Dyn chief strategy officer Kyle York) “a sophisticated, highly distributed attack involving tens of millions of Internet Protocol addresses.”

As Bryan Krebs’ KrebsOnSecurity blog first reported, the attack was launched with the help of hacked Internet of Things (IoT) connected devices such as CCTV video cameras and digital video recorders (DVRs) that were infected with software (in this case the Mirai botnet) that then flooded Dyn servers with junk traffic.

The World Economic Forum (WEF) recently warned that failing to understand and address risks related to technology, primarily the systemic cascading effects of cyber risks or the breakdown of critical information infrastructure could have far-reaching consequences for national economics, economic sectors, and global enterprises.

As the IoT leads to more connections between people and machines, cyber dependency will increase, raising the odds of a cyberattack with potential cascading effects across the cyber ecosystem, the WEF noted.

While IoT connected devices have the potential to transform how businesses and individuals—and their insurers—conduct, manage and monitor their operations, workplaces and their homes, clearly there are embedded risks that insurers need to consider.

Over at Celent’s insurance blog, Donald Light, director of Celent’s North America property/casualty practice, says the Dyn DDoS attack has a number of potentially serious implications for insurers.

Light writes:

“An insurer with a Connected Home or Connected Business IoT initiative that provides discounts for web-connected security systems, moisture detectors, smart locks, etc. may be subsidizing the purchase of devices which could be enlisted in a botnet attack on a variety of targets. This could expose both the policyholders and the insurer providing the discount to a variety of potential losses.”

If the same type of safety and security devices are disabled by malware, homeowners and property insurers may have increased and unanticipated losses, Light suggests.

The Insurance Information Institute white paper on cyber threats and opportunities is available here.

IoT and Insurers of Things

There’s a lot of buzz around the Internet of Things (IoT), not least with latest forecasts from Gartner suggesting that 20.8 billion connected things will be in use worldwide by 2020.

Already the estimated number of connected things in 2016–6.4 billion, according to Gartner–is a 30 percent increase on 2015. In fact 5.5 million new things will get connected every day in 2016, Gartner predicts.

A press release notes:

Aside from connected cars, consumer uses will continue to account for the greatest number of connected things, while enterprise will account for the largest spending.”

Gartner estimates that 4 billion connected things will be in use in the consumer sector in 2016, and will reach 13.5 billion in 2020. (Hat tip  Canadian Underwriter for its report here)

Numerous analysts have pointed to IoT’s power to transform the insurance industry.

In this Deloitte QuickLook blog post, Sam Friedman writes that IoT will likely accelerate the vast amounts of data available to insurers as Web-connected sensors become the norm.

For example, telematics for usage-based auto insurance can provide carriers with 24/7 updates about where, when and how fast an insured travels, as well as assessing their turning and braking habits, traffic navigation skills and response time.

This same IoT technology has applications in a number of other coverages in personal, life and health and commercial insurance, Friedman writes.

Another example  is “smart” homes which will allow homeowners to monitor their property, its security and elements like heating remotely. Insurers could provide loss control advice to minimize threats and perhaps take action to secure insured properties, he suggests.

And in this Accenture blog post, Daniele Presutti writes about how IoT will change how insurance is sold and who sells it. He predicts an increasing presence in the insurance business by tech-savvy competitors, such as Google and Amazon.

But it’s not all bad news, he writes:

As people, homes, organizations and even cities become increasingly interconnected, an array of new opportunities will emerge. Smart and agile insurance companies will be able to take advantage of the IoT to launch new products, with new customers and capture new markets. These companies will be the Insurers of Things. For them the possibilities will be huge.”

Read more about  how insurers are innovating along with the evolution of IoT in our latest paper Cyber Risks: Threat and Opportunities.