Category Archives: Technology

Wedding Tractor Trailers to the Internet of Things: What Could Possibly Go Wrong?

“We went out again. We got maybe six steps before lights blared in our faces. It had crept up, big wheels barely turning on the gravel. It had been lying in wait and now it leaped at us, electric headlamps glowing in savage circles, the huge chrome grill seeming to snarl.”

Transportation and logistics companies are now among the top-targeted industries by computer hackers

When Stephen King wrote Trucks – a tale of big rigs, pickups, and earth movers coming suddenly to life and terrorizing people they had trapped in a diner – he didn’t speculate about how or why they’d been incited to malevolence. Aliens? The Soviets? Who cared? It was the 1970s, and all he needed to do was deliver a solid horror yarn.

I loved that story when I read it in high school – mainly because it scared the daylights out of me and yet I knew for sure it couldn’t happen. Could it? Nah!

Today I read an article about “platooning”, in which “a lead vehicle wirelessly assumes control over the throttle and braking of one, two, or more vehicles following along behind it. In many scenarios, the drivers in a platoon continue to steer their vehicles and can disengage from the convoy at any time, but the first vehicle determines the speed and braking maneuvers of the entire platoon. Because the follower trucks maintain constant communication with the lead vehicle and have synchronized acceleration and braking, platooning trucks can maintain much shorter distances between themselves as they travel.”

Bam! I was right back in that 1970s diner inside Stephen King’s warped, brilliant, and quite possibly prophetic brain.

From there I time traveled forward to Bastille Day 2017 in Nice, France, where 84 people were killed when a radicalized individual plowed a 20-ton truck into a crowd waiting to watch a fireworks display. The previous December, CNN reminded me, 12 people were left dead and 48 injured when a tractor trailer was driven into a Berlin Christmas market.

“Platooning, which is based on vehicle-to-vehicle (V2V) communications, has been shown to increase the fuel efficiency of both the lead and following vehicles, saving fleet operators money and reducing carbon dioxide emissions,” the article in Verisk’s Visualize insurance news and thought leadership site tells me comfortingly. It cites a German pilot program in which truck platooning generated fuel savings of 3 to 4 percent. Platooning could lead to huge cost savings for businesses and consumers.

Who doesn’t love fuel efficiency?

And then I read an article in Today’s Trucking that began:

“When Harold Sumerford’s phone rang at 2:30 a.m. on April 2, he knew the news couldn’t be good. But he figured it was probably the safety department – not the CFO telling him the company’s entire computer system was down from a ransomware attack.”

Sumerford is CEO of J&M Tank Lines. According to the article, it took four days for his company to begin functioning after the attack, “and during those four days, they weren’t able to bill any customers or enter anything into the system.”

Granted, this is a far cry from having the entire fleet go on a murderous rampage, but the Internet of Things is still young.  It hasn’t been long since researchers demonstrated that they could do everything from altering a big rig’s  instrument panel, triggering unintended acceleration, or disabling brakes.

“These trucks carry hazard chemicals and large loads,”  Bill Hass, one of the researchers from the University of Michigan’s Transportation Research Institute, told Wired. “If you can cause them to have unintended acceleration…I don’t think it’s too hard to figure out how many bad things could happen with this.”

J&M’s experience, according to Today’s Trucking, was “just one example of a rapidly growing problem with cybersecurity in the trucking industry. Transportation and logistics companies are now among the top-targeted industries by computer hackers.”

According to an article in ZDNet published just a few weeks ago, “Hackers are deploying previously unknown tools in a cyberattack campaign targeting shipping and transport organisations with custom trojan malware. Identified and detailed by researchers at Palo Alto Networks’ Unit 42 threat intelligence division, the campaign has been active since at least May 2019 and focuses on transportation and shipping firms operating out of Kuwait in the Persian Gulf.”

This as everyone I know seems to be panting with enthusiastic anticipation for vehicles that drive themselves!

Look, I’m no Luddite. I appreciate the benefits offered by and realized through interconnectivity.

But I also have a front row seat observing the difficulties people who assess and quantify risk for a living experience in getting and keeping their heads around the ever-changing world of cyberrisk.  As data and “stuff” become increasingly intertwined and the risks surrounding them are less clearly defined, is it so unreasonable to suggest that pushing humans out of the driver’s seat at this moment isn’t the only or best path to traffic safety, low prices, and reducing our collective carbon footprint?

Older Generations More Cyber Savvy Than Their Younger Counterparts

By Loretta Worters, Vice President, Media Relations, Insurance Information Institute

Getty images

Despite a never-ending cycle of cyber breach headlines, individuals continue to be underprepared for even the most common cyber exposures.  According to Chubb’s third annual Cyber Risk Survey, which examined individuals’ comprehension of cyberrisk and the steps they are taking to protect themselves, complacency seems to have taken hold: eight-in-10 Americans continue to be concerned about a cyber breach, yet only 41 percent use cybersecurity software and only 31 percent regularly change their passwords. These numbers are virtually unchanged from 2018.

According to Chubb’s survey, individuals don’t recognize the value of individual pieces of personal data. For example, just 18 percent of respondents are concerned about their email addresses being compromised. Similarly, only 27 percent of respondents cite concern about their medical records being breached.

The UK’s National Cyber Security Centre (NCSC), which analyzed passwords belonging to accounts worldwide that had been breached bares the Chubb survey out.  The NCSC notes that several combinations of numbers made up the top 10, while “blink182” was the most popular musical artist and “superman” the most common fictional character. But “123456” was the most common password, with 23.2 million accounts using the easy-to-decipher code. “123456789” was used by 7.7 million, while “qwerty” and “password” were each used by more than 3 million accounts.

Chubb survey results indicate that a consistently large portion of older respondents employ better cyber practices than younger generations. Per the survey, 77 percent of those 55 years and older delete suspicious emails, compared to half (55 percent) of respondents between 35 to 54 and just a third (36 percent) of respondents from 18 to 34. Similar patterns arise when looking at those enrolled in cybersecurity monitoring services, where 53 percent of respondents over 55 are enrolled in a cybersecurity monitoring service.  But this same service is used by only 1 percent of respondents between 35 to 54 and just 29 percent between 18 and 34.

More concerning is that the behavior of younger generations appears to be getting worse, the Chubb report noted. For example, 76 percent and 74 percent of adults over 55 regularly deleted suspicious emails in 2017 and 2018, respectively, as compared to just 47 percent and 40 percent of adults between 18 and 34 during the same time period.

In most narratives, it’s the younger generation teaching older generations about the latest internet trends. When it comes to cyber safety, however, it’s clear that the tables have turned. The first lesson older generations should impart? The importance of talking with an independent agent and broker about coverage for a cyber-related incident.

Without it, and in the event of a hack or breach which leads to a financial loss, individuals could be left without a safety net in place. In some cases, policies will also cover incident response expenses, including legal services, reputation management, and mental and emotional pain diagnosed by a physician.

October is National Cybersecurity Awareness Month, (NCSAM), a collaborative effort between government and industry to raise awareness about the importance of cybersecurity and to ensure that all Americans have the resources they need to be safer and more secure online. This year’s NCSAM will emphasize personal accountability and stress the importance of taking proactive steps to enhance cybersecurity at home and in the workplace. This year’s overarching message – Own IT. Secure IT. Protect IT. – will focus on key areas including citizen privacy, consumer devices, and ecommerce security.

 

Intent and ability distinguish cyberrisk from natural perils

Cyberrisk is often compared with natural catastrophe-related threats, but a recent study by global reinsurer Guy Carpenter and analytics firm CyberCube suggests a better analogy is with terrorism.

“Probability is assessed in terms of intent and capability.”

The report – Looking Beyond the Clouds: A U.S. Cyber Insurance Industry Catastrophe Loss Study – quotes Andrew Kwon, lead cyber actuary for Zurich: “Extending the lessons learned from property cats to the cyber space is intuitive and logical, but cyber continues to be a unique force unto itself. A hurricane does not evolve to bypass defenses; an earthquake does not optimize itself for maximum damage.”

This passage resonated as I read it because a few hours earlier I’d been reading a FreightWaves article about risks posed to international shipping by digitalization and pondering the fact that the same technology that helps vessels anticipate and avoid adverse weather also subjects them – and the goods they transport – to a panoply of new risks.

The FreightWaves article quotes U.S. Navy Captain John M. Sanford – who now leads the U.S. Maritime Security Department within the National Maritime Intelligence Integration Office – describing how the NotPetya virus inflicted $10 billion of economic damage across the U.S. and Europe and hobbled company after company, including shipping giant Maersk, in 2017.

Sanford said Russian military intelligence was behind the hacker group that spread NotPetya to damage Ukraine’s economy. The virus raced beyond Ukraine to machines around the world, crippling companies and, according to an article in Wired, inflicting nine-figure costs where it struck.

“Maersk wasn’t a target,” Sanford said. “Just a bystander in a conflict between Ukraine and Russia.”

Collateral damage.

The FreightWaves article describes how supply chains, ports, and ships could be disrupted more intentionally through GPS and Electronic Chart Display and Information System (ECDIS) systems onboard ships, or even via a WiFi-connected printer: “Pirates working with hackers could potentially access a ship’s bridge controls remotely, take control of the rudder, and steer it toward a chosen location, avoiding the expense and danger of attacking a vessel on the high seas.”

The Carpenter/CyberCube report identifies parallels in the deployment of “kill chain” methodologies in both conventional and cyber terrorism: “Considering terrorism risk in terms of probability and consequence, probability is assessed in terms of intent and capability.”

As our work and personal lives become increasingly interconnected through e-commerce and smart thermostats and we look forward to self-driving cars and refrigerators that tell us when the milk is turning sour, these considerations might well give us pause.

Hurricanes, earthquakes, fires, and floods might be scary, but at least we never had to worry that they were out to get us.

 

Hope the (fire)wall is high enough

Getty Images

Fans of Game of Thrones are getting ready to learn the fate of their favorite characters when the final season of the show starts airing on HBO on April 14th. At the same time, security experts are warning that cyber-crooks are ready to take advantage of the show’s popularity to attack people’s computers.

The huge popularity of the show makes illegal download sites, where users can view episodes without the required subscriptions, popular distributions point for malware. In 2018 Game of Thrones accounted for 17 percent of all infected pirated content, according to Kaspersky Labs, even though no new episodes aired on TV over that time. This suggests that the coming premiere could be the most dangerous time to be downloading the torrents.

According to Kaspersky, the most popular kind of attack via pirated content was a trojan, a piece of software that is installed on a computer and allows the hacker to take control of that device.

The good news is that, overall, the prevalence of TV show-related malware has been declining. In 2018, the total number of users who encountered this kind of malware was 126,340, a third less than it was the year before. The number of total attempts dropped by 22 percent, to 451,636. Kaspersky said that drop was in line with a reduction in the number of security threats across the internet. But it might also be linked to a drop in the number of people using torrents, as interest in the technology declines.

Blockchain: the anatomy of a hype

Remember blockchains?

They were going to change the world. Is there a problem or challenge? Consider using a blockchain. Engaged in a business? Consider the blockchain. Thinking about where to get lunch? Again, blockchain.

No industry would be left un-disrupted. Insurance would never be the same again.

And sure, that all might come to pass someday. Very smart people are working on blockchain applications. But right now it seems like the hype bubble is bursting, at least in the public mind.

Here are Google searches for “blockchain” over the past five years in the “finance” category:

Data source: Google Trends

Here is the search for “cryptocurrency”:

Data source: Google Trends

And just for fun, here’s the valuation of bitcoin:

Data source: CoinDesk

I’m not the first person to notice this, of course. The Gartner “Hype Cycle for Emerging Technologies” 2018 report put “blockchains” on the cusp of the dreaded “trough of disillusionment”.

Source: Gartner

Trough of disillusionment. Sounds ominous.

Why the cool down about blockchains? The short answer: expectations have begun to re-align with reality.

There are several reasons why.

Earlier this year I wrote an article for the Actuarial Review about blockchains – and how they might be solutions in search of a problem. In the article, I cited Stephen J. Mildenhall from the School of Risk Management of St. John’s University, who compared a blockchain to a military tank. In theory you could drive your kids to school in a tank. But why would you? Tanks are extremely expensive, slow and inefficient (plus, I’m not sure they’re road-legal). A minivan would be a better solution. Like a minivan, a simple SQL database could probably do most jobs that a blockchain could do, except much more cheaply, quickly and efficiently.

Another big sell of blockchains was that they were theoretically unhackable. As I wrote last year, that’s only kinda-sorta the case. Blockchains themselves might be unhackable (depending on their governance structures), but for a lot of applications they need to connect to that extremely hackable thing called The Internet. Which is why you’re regularly reading about massive cryptocurrency heists.

But just because we’re in the trough of disillusionment (sorry, I just love that phrase), doesn’t spell the end for blockchains. This is a normal process for emerging technologies: a new technology is developed, everyone gets extremely excited, then reality kicks in and the hard (and underreported) work begins of perfecting the technology for real-world use.

I wouldn’t be surprised if blockchains quietly become ubiquitous for some applications in the near future – but how they’re integrated and what kind of real impact they’ll have are anyone’s guess.

In the meantime: beware the hype about any emerging technology.

The future of telemedicine and workers’ compensation insurance

You can’t talk about workers’ compensation insurance these days without mentioning “telemedicine” at least once. It should therefore come as no surprise that telemedicine was given its own panel discussion at the 2019 Workers’ Compensation Research Institute’s (WCRI) Annual Issues and Research Conference.

(In case you don’t know, the American Telemedicine Association (ATA) defines telemedicine as the “remote delivery of health care services and clinical information using telecommunications technology.” Think of an app that lets you video chat with a doctor, for example.)

The potential benefits of telemedicine to patients, providers, and employers could be immense. Improved access to healthcare services. Fast, personalized care. Treatment efficiencies. Reduced costs. Dr. Stephen Dawkins of Caduceus USA put it this way: “It’s crystal clear, as a provider, that telemedicine is a tsunami that will change the paradigm of medical care.”

Indeed, as Dr. David Deitz of Deitz & Associates noted, telemedicine is almost the perfect storm of improved healthcare services – and is already experiencing exponential growth in the commercial health sector. Citing the ATA, he noted that there were an estimated 1.25 million telehealth visits in 2016 alone – and that some sources estimate that over 400 million of U.S. medical visits could have been telemedicine encounters.

But has telemedicine made inroads into workers’ compensation?

Dr. Deitz pointed out that there is “essentially no quantitative data on [telemedicine] use in workers’ compensation.” Furthermore, he argued that there are several open questions when it comes to telemedicine: what are the appropriate regulations and reimbursement models? Is there a quality trade-off for telemedicine versus in-person encounters? Are there any privacy or cybersecurity concerns?

Kurt Leisure, vice president of risk services for The Cheesecake Factory, offered some preliminary answers when describing his company’s new telemedicine program for worker injuries, implemented in February 2018.

According to Leisure, the program basically works as follows. An injury occurs. If urgent, the injured worker proceeds directly to urgent care or the emergency room. If it’s non-urgent, the worker calls the company’s nurse triage system for preliminary care. If the phone call isn’t enough, the worker has the option of being escalated to a telemedicine program on their smartphone.

What have been the results so far? Generally positive, with the program leading to $153,000 in hard dollar savings in 2018. But Leisure did note that there are still wrinkles that need to be ironed out. Identification of telemedicine candidates during the triage phase needs improvement.  Employee trust in the program could also improve.

But the injured workers seem to approve of the program. “Overall, I’m really excited, there’s a lot of upside potential just in our initial program,” Leisure said. “I think it will explode over time.” One particular benefit of telemedicine could be keeping workers and employers out of the courtroom. “We think the litigation rate is going to drop significantly” with widespread and effective telemedicine, said Leisure.

Indeed, despite some open questions about workers’ compensation adoption of telemedicine, the panel agreed that the industry would benefit tremendously. “Telemedicine basically gives you a conduit through which you can achieve better case management,” said Dr. Dawkins.

Latest Driverless Vehicle Roadblock: Bicycles

I hope he’s wearing a helmet.

As someone who (perhaps unwisely), likes to bike around New York, I’ve long looked forward to driverless cars. They can’t drive drunk. They won’t drive like reckless teenagers. They won’t threaten to beat me up for ringing my bell (true story).

Even better: they’ll be able to see and avoid me even on a dark and stormy night.

Or so I thought.

As it turns out, bicycles could slow driverless vehicle deployment. Case in point: Holland, land of bicycles.

According to a recent KPMG report, the Netherlands is the country most prepared for autonomous vehicles. The country is actively working to begin autonomous truck platooning on highways; a legal framework has been developed for testing AVs on public roads without a driver; and the country is even preparing a drivers license for AVs.

But whether AVs will ever operate in Holland’s cities is an open question. Because, as an executive quoted in the report put it, “We have a lot of bicycles.” That’s an understatement. According to The Guardian, there are an estimated 22.5 million bicycles for a population of 17 million people.

And unfortunately, as the article notes, bicyclists are unpredictable: “the varying sizes and agility of cyclists, with their sudden changes in speed and loose adherence to the rules of the road, present a major challenge to the [AV] existing technology.”

Such a major challenge, in fact, that KPMG suggests forgetting about ever integrating AVs into a bicycle-heavy environment: just keep AVs and bicyclists separated entirely.

We don’t have as many bicyclists in New York. The city estimates somewhere in the ballpark of 1.5 million casual riders.  But that’s probably enough cycling on our already-crowded, dilapidated streets to put a hold on my dream of a safe, driverless vehicle future. (AVs in Phoenix, meanwhile, have an entirely different problem…)

In the meantime, you would do well to wear a helmet and stop texting!

Data Analytics Comes to the Legal Profession

there are insights in there somewhere

Did “data analytics” ruin baseball? Depends on whom you ask: the cranky old man in a Staten Island bar or the nerd busy calculating Manny Machado’s wRC+ (it was 141 in 2018, if you cared to know).  

What is indisputable, though, is that the so-called “Sabermetrics revolution” rapidly and fundamentally changed how the game is played – this is not your grandpa’s outfield! 

And data is eating the whole world, not just baseball. Now it’s coming for the legal profession, of all places. The Financial Times recently published an article on how law analytics companies are using statistics on judges and courts to weigh how a lawsuit might play out in the real world. One such company does the following (per the article):  

The sort of information that might be analysed includes how many times the opposing lawyer has filed certain types of lawsuit, in which court, with what success rate, who they have represented, and which attorneys they have faced. Once a judge has been assigned to the case, legal research companies can provide statistics on his or her record as well.  

Another law analytics firm “shows the litigation history of judges, lawyers and law firms, including win/loss rates for trials that are benchmarked to competitors, the success rates of different types of motion in individual courts and a database of who sues and gets sued most often.” 

Proponents reportedly argue that this is a) a more efficient way to go about the business of law and b) a way to identify where the legal system is inconsistent.  

That being said, it’s not yet all sunshine and roses for legal system Sabermetricians. As the FT notes, most litigation is dropped or settled, which means there are no public court documents for those cases. Which means no data to be mined. How many cases get dropped or settled? Perhaps as many as 90 percent. Big data is hard when most of the data don’t exist.  

So that means doing things the old-fashioned way. One law firm identified by the FT supplements data gaps by using (quel horreur!) real human lawyers to assess how a case might fare during the legal process.  

Another issue is whether anything useful can be gleaned from what little data there are. One gentleman quoted in the article put it thus: “The judge analytics demonstrations I have seen to date oscillate between the blindingly obvious and the statistically irrelevant.”  

Nonetheless, as the datasets grow, it doesn’t seem impossible that the ability to assess lawsuits will only improve. Which leads me to wonder: will judges change their behavior in response? The baseball data revolution didn’t just reveal information – it changed how players actually played in response to that information. Data isn’t passive, turns out. It remains to be seen how shining the light of data on the court system could change the court system itself.

Much Ado About AI at I.I.I. Joint Industry Forum

By Lucian McMahon

You’re familiar with the buzzwords by now. Internet of things. Blockchain. Artificial intelligence.

At the 2019 I.I.I. Joint Industry Forum, a panel on artificial intelligence and insurance cut through the buzz. How can AI be used to help build resilient communities? And how can the insurance industry leverage AI to better help customers address risk?

Pictured left to right: Andrew Robinson, Sean Ringsted, Ahmad Wani, Kyle Schmitt, James Roche

New products, more resilience

Regarding resilience, Ahmad Wani, CEO and co-founder of One Concern, said that AI is being used to harness vast troves of data to identify, on a “hyperlocal level,” the impact of a whole range of hazards. His company is already doing just that, partnering with local governments and insurance companies to better plan for future losses. “We don’t need to wait for disasters to happen to prioritize the response, we need to make changes and to act now before the disaster,” Wani said.

Sean Ringsted, executive vice president, chief digital officer and chief risk officer at the Chubb Group, also pointed out that insurers are already expanding their product offerings thanks to AI and big data. Contingent business interruption, for example: the sheer volume of data can now allow insurers to effectively analyze supply chain risks and price them accordingly.

Transparency and fairness are top of mind

But as Ringsted said, “it’s not all good news and roses.” What sorts of concerns should insurers and the public have about using AI?

Kyle Schmitt, managing direct of the global insurance practice at J.D. Power cited consumer concerns with the data and algorithms used for AI-enabled products. Consumers are deeply concerned with the security and privacy of any data they share with insurers. Per Schmitt, consumers also worry about the fairness of AI products, when algorithms instead of people are making decisions in an opaque way.

This is the so-called “black box problem” of AI, in which complex algorithms will arrive at answers or decisions without anyone being able to explain how they did so. Ringsted stressed that, for AI to be a viable tool, its mechanisms will need to be explainable to regulators and the public.

James Roche, vice president, personal lines product development at ISO, echoed this sentiment: social responsibility requires both robust data stewardship and strict control over AI outputs to ensure that outcomes are fair and within ethical standards.

From a consumer perspective, ensuring ethical use of AI is critical. Schmitt said that at the end of the day consumers are open-minded, “but they just want some ground rules.”

Reminder: your smart home security system is hackable

Doors that can be locked remotely with a smartphone app. Facial recognition cameras that alert you when certain people arrive at your front door. Motion sensors that trigger video recordings when someone steals your Amazon packages.

If we’re being honest, smart home security systems sound extremely creepy to me.

But I understand the sell: smart home security devices can keep people safe and offer peace of mind – did I remember to lock the door? Doesn’t matter, my phone can lock it.

Nothing in this world is perfect, though. Unlike smart home security systems, you can’t use a computer to hack into and unlock a standard deadbolt.

The Insurance Journal recently ran a piece describing yet another experiment where researchers easily hacked into someone’s smart home security system. In one scenario, a researcher hacked into a person’s phone using a coffee shop’s free WiFi. Once inside, he accessed their smart light switch app, and then jumped from there into the smart home’s security devices. Voila, smart door unlocked. All that’s missing is a red carpet to welcome thieves as they waltz in the front door.

This shouldn’t be news. Here’s a video from 2016 of researchers hacking into a smart lock:

Everything is a trade-off. As informed consumers, we can’t assume that a solution to one security problem (forgetting to lock our doors) will solve every other security problem – or that it won’t create new ones (hacking into our front doors). It’s important to weigh the risks and benefits of smart home security, and to conduct due diligence in researching the cybersecurity protections of each system. It’s also important to consider additional protections, like purchasing cybersecurity insurance coverage, just in case.

If that sounds onerous, it’s nothing compared to dealing with a robbed house.