Entries tagged with “Tech”.
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Friday, January 22, 2016
Posted by Claire under Business Risk, Emerging Risks, Technology
As if we needed another reminder of the rising threat of cyber attacks, the estimated EUR 50 million ($55 million) loss arising from a cyber fraud incident targeting Austrian air parts supplier FACC AG made us sit up and take notice.
As Bloomberg reports here, if the damages do indeed amount to $55 million this would be one of the biggest hacking losses by size.
Bloomberg also points out that the incident is made more intriguing because FACC is 55 percent owned by China-based AVIC.
It will take time for the details of this attack to emerge, but in a January 20 press release, FACC acknowledged that the target of the cyber fraud was the financial accounting department of FACC Operations GmbH.
The company also noted that its IT infrastructure, data security, IP rights and the group’s operational business are not affected by the criminal activities.
Further, FACC said the $55 million in damage was an outflow of “liquid funds”.
“The management board has taken immediate structural measures and is evaluating damages and insurance claims,” FACC added in its third quarter report.
According to this report by ComputerWeekly.com, the fact that FACC’s financial accounting department was targeted in the fraud is prompting speculation that the company was likely the victim of a so-called whaling attack, also known as business email compromise (BEC) and CEO fraud.
These sophisticated phishing attacks are when cyber criminals send fake email messages from company CEOs, often when a CEO is known to be out of the office, asking company accountants to transfer funds to a supplier. In fact the funds go to a criminal account.
Last year, the Federal Bureau of Investigation (FBI) described BEC fraud as an emerging global threat.
Since the FBI’s Internet Crime Complaint Center (IC3) began tracking BEC scams in late 2013, more than 7,000 U.S. companies have been targeted by such attacks with total dollar losses exceeding $740 million. If you consider non-U.S. victims and unreported losses, that figure is likely much higher.
The rising incidence of BEC and CEO fraud and its intersection with cyber insurance will form the topic of a future blog post.
Both the WEF Global Risks Report 2016 and the Allianz Risk Barometer 2016 have identified cyber attacks and incidents among the top risks facing business.
Find out more about cyber risks and insurance in the I.I.I. white paper Cyber Risk: Threat and Opportunity.
Monday, January 4, 2016
Posted by Claire under Technology
“Alexa, what is insurance?”
This is just one of many questions that can be asked of an Amazon Echo, our smart home companion that arrived over the holidays.
And as I’m finding out, the part-Siri part-bluetooth speaker that can stream music, tell me the weather or what the traffic’s like, can also be integrated with our smart home devices and hubs.
Turning on the lights, locking the doors and changing the temperature at home are all possible once Alexa is introduced to compatible products and hubs.
As Internet of Things (IoT) devices proliferate and debut at CES 2016, the world’s largest technology trade show happening in Las Vegas this week, insurers will be taking note.
A new International Data Corporation (IDC) report estimates worldwide spending on the IoT will grow from $699 billion in 2015 to nearly $1.3 trillion in 2019—at a 17 percent compound annual growth rate (CAGR).
While manufacturing and transportation (at $165.6 billion and $78.7 billion respectively) led the world in IoT spending in 2015, IDC says the insurance, health care and consumer industries are expected to see the fastest growth over the next five years:
Over the next five years, the industries forecast to have the fastest IoT spending growth will be insurance (31.8 percent CAGR), healthcare, and consumer.”
While insurers have already explored the benefits of connectivity in the auto insurance sector, the connected home represents a major opportunity for property/casualty insurers, according to a report by Accenture.
Insurers can leverage data from connected home devices to assess and mitigate risk, increase pricing sophistication, and offer new products, all of which help drive operational efficiency and top-line growth.”
Key areas of opportunity for insurers identified by Accenture include:
—Better risk management and risk mitigation, through claims avoidance and better claims handling;
—Better underwriting, based on increased data flows and a keener understanding of risk factors and behavioral elements;
—New product offerings, including value-added services delivered in a partnership
Security, energy management, lighting, water, thermostats, weather, appliances, and smoke and fire are the major areas within the connected home where insurers have the potential for improving underwritten precision and limiting losses while strengthening customer relationships, Accenture says.
However, insurers will also need to tackle challenges presented by large inflows of new data such as customer indifference or lack of understanding of new offerings, as well as privacy and regulatory concerns, to convert that opportunity into profitable growth, Accenture notes.
Wednesday, December 30, 2015
Posted by Claire under Social Media, Technology
As we get ready to ring out the old and ring in the new, we wanted to share with you our most popular posts in 2015.
Our most-read posts here at Terms + Conditions illustrated how interested our readers are in the advancing technology landscape and its impact on the insurance industry. Self-driving cars, cyber insurance and the sharing economy were all featured among the top 10 posts during the year.
In Self-Driving Cars — With or Without You? we recounted a Time.com writer’s chauffeured ride by a prototype Audi from Silicon Valley to Las Vegas for last year’s Consumer Electronics Show. Self-driving vehicles are no longer a thing of the future, we wrote, and this has evolving implications for insurers.
Our post Cyber Business Interruption Risk Often Underestimated reported on a study by Allianz warning that the impact of business interruption (BI) from a cyber attack is a risk that is often underestimated. It predicted that BI costs could be equal to—or even exceed—direct losses from a data breach.
The growing appetite for cyber insurance among small and mid-sized companies was another popular post.
Two of our most-read posts during 2015 also revisited the impact of Obamacare on workers compensation insurance.
In case you missed them, here’s a complete list of our top 10 posts from the year:
- Self-Driving Cars – With or Without You?
- WCRI Looks At Impact of Affordable Care Act on Workers Comp
- A Revisit: Impact of Obamacare on Workers Comp
- Cyber Business Interruption Risk Often Underestimated
- More Small and Mid-Sized Companies Buying Cyber Insurance
- Cyber Value-At-Risk
- Homeowners Claims: A Picture of Volatility
- Cyber Losses vs. Property Losses
- One Ruling, but Uber Impact
- Litigation Trends and the Class Action Factor
Thanks for following. We wish all our readers a happy and healthy new year!
Monday, December 7, 2015
Posted by Claire under Insurers and the Economy, Technology
U.S. property-casualty insurers face another year of disruptive change in 2016, according to a new report by Ernst & Young.
In its 2016 U.S. Property-Casualty Insurance Outlook, EY says that digital technologies such as social media, analytics and telematics will continue to transform the market landscape, recalibrating customer expectations and opening new ways to reach and acquire clients.
The rise of the sharing economy, in which assets like cars and homes can be shared, is requiring carriers to rethink traditional insurance models.
An outlook for slower economic growth, along with increased M&A and greater regulatory uncertainty, will set the stage for innovative firms to capitalize on an industry in flux in 2016.
Insurers that stay ahead of these shifts should reap substantial benefits, while laggards risk falling behind, or even out of the race.”
EY reports that competitive pressures in the insurance industry are building as digital technology erodes the advantages of scale enjoyed by established insurers and empowers smaller players to compete for market share through more flexible pricing models and new distribution channels.
It cites the recent launch of Google Compare, which allows customers to comparison shop for insurance, as the start of a larger wave of insurance tech activity in 2016.
Along with this, customer expectations and behaviors are evolving at a rapid pace, often faster than traditional mechanisms can react.
Driven by their interactions in other digitally enabled industries, such as retail and banking, property-casualty customers are increasingly demanding a more sophisticated and personalized experience—including digital distribution, anytime access, premiums accurately reflecting usage and individual risk and higher levels of product customization and advice.”
Policyholders are also seeking coverage of a broader range of risks, such as cybersecurity and under-protected property exposure, according to EY’s outlook.
Hat tip to Insurance Journal which reported on this story here.
Check out a recent presentation by I.I.I. president Dr. Robert Hartwig titled Insurance, the Sharing Economy, Millennials and More.
Thursday, December 3, 2015
Posted by Claire under Health & Safety, Technology
This is a good one for the holiday season—and ahead of your commute home.
A majority (78 percent) of U.S. adults believe that distracted walking is a serious issue, but only 29 percent see themselves as the culprit.
The new study by the American Academy of Orthopaedic Surgeons (AAOS) found that many (46 percent) feel distracted walking is a danger, yet 31 percent admit it is something they are likely to do.
In the words of Alan Hilibrand, MD, AAOS spokesperson:
Today, the dangers of the ‘digital deadwalker’ are growing with more and more pedestrians falling down stairs, tripping over curbs, bumping into other walkers, or stepping into traffic causing a rising number of injuries—from scrapes and bruises to sprains and fractures.”
The AAOS cited a 2013 study that showed a doubling in emergency department hospital visits for injuries involving distracted pedestrians on cell phones between 2004 and 2010 (see our earlier post on that study here).
So how common is distracted walking?
According to the AAOS, nearly four out of 10 Americans say they have witnessed a distracted walking incident, and just over one quarter (26 percent) say they have been in an incident themselves.
One of the challenges in combating distracted walking may be that people are overly confident in their ability to multitask, the AAOS found.
When asked why they walk distracted, 48 percent of respondents say they just don’t think about it, while 28 percent feel they can walk and do other things, and 22 percent say they are busy and want to use their time productively.
The AAOS survey which was conducted by polling firm IPSOS involved more than 2,000 respondents nationally and another 4,000 total in select urban areas.
Here’s the infographic:
Thursday, November 19, 2015
Posted by Claire under Auto Insurance, Technology
Our mission at the Insurance Information Institute (I.I.I.) is to help people understand how insurance operates. Sometimes that means understanding how insurers handle new technologies, particularly auto insurance. Chief Actuary James Lynch answers a question we got last week:
Q: I am researching driver assist technology and the advantages and pitfalls that could be associated with it. Do driver assist technologies raise or lower insurance premiums? A few of the technologies I’m looking at are lane-keeping devices, blind spot warning systems and hands-free cruise control.
A: As far as technological innovations go, insurance companies adjust their rates after a technology has proved its worth on the road. Only then do they know that a technology is effective and how much discount is warranted, if any. That means hands-free driving systems, which have only been introduced in the past couple months, are not earning anyone discounts right now.
You mention lane departure warnings. That is a technology that has yet to prove valuable on its own. The feature alerts a driver that is beginning to drift from one lane to another. When the driver drifts, an alarm beeps. One problem, it appears, is that drivers have trouble understanding what the beep means.
In addition, the feature can be turned on and off by the owner, and owners frequently find it so annoying that they turn it off. I happen to have a car with this technology, and I drove with it for about 10 minutes before turning it off. You would be surprised how many times your wheels touch a lane line; I know I was, particularly when the road curved. So insurers probably aren’t giving a lot of credits for the system.
That doesn’t mean that the idea of a lane departure warning is useless. The problem may be that the notification system doesn’t help the driver do a better job. There’s every chance that manufacturers will be able to refine the system so that it does better later. If that happens, rates will eventually adjust.
Another possibility: Sometimes a feature by itself doesn’t work as touted but will become an important part of a larger system. An example here is antilock brakes, which were introduced a couple of decades ago. The brakes had a special feature that was supposed to help a car stop more quickly when its brakes were slammed on. By itself, they weren’t much of a help – which surprised a lot of people – but they have become an important part of electronic stability control, a computerized system that figures out when a car is starting to skid and corrects the situation.
Electronic stability control is perhaps the biggest safety advance of our generation. The feature, standard since 2012 on all new vehicles, has cut the risk of a fatal single-vehicle crash in half. Insurers closely monitor this stuff, particularly the Insurance Institute for Highway Safety and its sister organization, the Highway Loss Data Institute.
Here at I.I.I. we offer more information on auto crashes in our Issues Update on the topic.
Friday, November 13, 2015
Posted by Claire under Emerging Risks, Technology
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.
Technology is not enough in the fight against cybercrime, effective cybersecurity measures require policy and process changes as well.
That’s the takeaway from an analysis of cyber-risk spending included in the 2015 U.S. State of Cybercrime Survey recently released by PwC.
While cybersecurity budgets are on the rise, companies are mostly reliant on technology solutions to fend off digital adversaries and manage risks.
Among the 500 U.S. executives, security experts and others from public and private sectors responding to the survey, almost half (47 percent) said adding new technologies is a spending priority, higher than all other options.
Notably, only 15 percent cited redesigning processes as a priority and 33 percent prioritized adding new skills and capabilities.
When asked whether they have the expertise to address cyber risks associated with implementation of new technologies, only 26 percent said they have capable personnel on staff. Most rely on a combination of internal and external expertise to address cyber risks of new solutions.
As PwC advises:
Companies that implement new technologies without updating processes and providing employee training will very likely not realize the full value of their spending. To be truly effective, a cybersecurity program must carefully balance technology capabilities with redesigned processes and staff training skills.”
Employee training and awareness continues to be a critical, but often neglected component of cybersecurity, PwC said. Only half (50 percent) of survey respondents said they conduct periodic security awareness and training programs, and the same number offer security training for new employees.
Some 76 percent of respondents to the survey said they are more concerned about cybersecurity threats this year than in the previous 12 months, up from 59 percent the year before.
As PwC noted, in today’s cybercrime environment, the issue is not whether a business will be compromised, but rather how successful an attack will be.
Check out Insurance Information Institute (I.I.I.) facts and statistics on cybercrime here.
Monday, June 22, 2015
Posted by Claire under Auto Insurance, Customer Satisfaction
Gen Y customers–or Millennials–have expressed a sharp increase in satisfaction with their car insurance compared to other generations, according to the just-released J.D. Power 2015 U.S. Auto Insurance Study.
The study examines customer satisfaction in five factors: interaction; price; policy offerings; billing and payment; and claims.
Overall customer satisfaction with their auto insurer reached an all-time high of 818 on a 1,000-point scale, an improvement of 8 index points from 2014.
Satisfaction among Gen Y customers increased by 21 points—the biggest increase compared with the other generations. Satisfaction among Gen X customers was up 6 points, and among Boomers by 4 points, while Pre-Boomers were less satisfied (-3 points).
Improved interactions had the greatest impact on overall customer satisfaction and were also the largest contributor to the year-over-year improvement, the JD Power survey found.
Interaction satisfaction among Gen Y customers came in at 827, an increase of 20 points from 2014.
Customer interaction preferences are changing. Gen Y’s preference to interact exclusively via digital self-service (Web or mobile) increased to 27 percent in 2015, up from 21 percent in 2011.
A similar preference to interact via Web or mobile is true of other generations: Gen X (23 percent vs. 19 percent in 2011); Boomers (12 percent vs. 10 percent); and Pre-Boomers (6 percent vs. 4 percent).
However, auto insurers need to have their websites ready to resolve customer service issues.
The survey found that among the interaction channels, satisfaction with the website experience receives the lowest average score, most notably among Gen Y customers (816, compared with 826 for Gen X, 841 for Boomers and 861 for Pre-Boomers).
JD Power noted that while customers across all generations are able to use online self-service for basic tasks such as making a payment and gathering information about their account, they also need to be able to resolve more complex issues online.
Still, some activities are better performed through personal interactions, J.D. Power noted.
For example, when it comes to discussing price changes, one-quarter (25 percent) of Gen Y customers would rather talk to someone in person or over the phone, and 23 percent indicate they prefer in person or over the phone rather than the website channel when they have questions about their policy coverage.
The Insurance Information Institute (I.I.I.) has some must-read facts and statistics on auto insurance here.
A California Labor Commission ruling that an Uber driver is a company employee, not an independent contractor may dampen fears that the on-demand economy spells the end for workers compensation, liability and health insurance. At least for now.
As reported by numerous news outlets, here and here, the decision out of California – though it applies to a single driver – could significantly increase costs for the ride-sharing business if it is copied by other states and in other cases.
It could also have potential implications for other segments of the economy important to property/casualty insurers.
As the New York Times reports:
The classification of freelancers is in dispute across a number of industries, including at other transportation companies. And the debate is set to escalate as the number of online companies and apps like Uber and others rises.”
The ruling, which commentators say could hurt Uber’s $40 billion-plus valuation, orders Uber to pay Barbara Berwick, $4,152 in expenses for the time she worked as an Uber driver last year.
Here are a couple of key excerpts from the California Labor Commission decision:
Plaintiffs’ work was integral to Defendants’ business. Defendants are in business to provide transportation services to passengers. Plaintiff did the actual transporting of those passengers. Without drivers such as Plaintiff, Defendants’ business would not exist.”
Defendants hold themselves as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation. The reality, however, is that Defendants are involved in every aspect of the operation.”
In response to the ruling (which it has appealed) Uber stated:
The California Labor Commission’s ruling is non-binding and applies to a single driver. Indeed it is contrary to a previous ruling by the same commission, which concluded in 2012 that the driver ‘performed services as an independent contractor, and not as a bona fide employee.’ Five other states have also come to the same conclusion.”
Potential insurance issues arising out of the on-demand or sharing economy are a recurring topic of conversation these days.
In a recent presentation I.I.I. president Dr. Robert Hartwig noted that traditional insurance will often not cover a worker engaged in offering labor or resources through these on-demand platforms.
For example, private passenger auto insurance generally won’t cover you while driving for Uber and a homeowners insurance policy won’t cover a homeowner for anything other than occasional rents of their property.
Also, Dr. Hartwig said: “Unless self-procured, on-demand workers (independent contractors) will generally have no workers comp recourse if injured on the job.”