A leading figure in the field of cyber insurance has warned brokers about an emerging area of risk, saying exposure is set to explode within the next few years.
Gerry Power, national head of cyber sales for Emergence Insurance, recently wrote for Insurance Business Australia “What we’re going to see in the next three to five years is the mainstreaming of Internet of Things (IoT) devices,” He went on to say “That’s going to create a whole new area of exposure and that’s going to be something that brokers, businesses, and insurers all need to adapt to as the world around us changes.”
IoT involves extending internet connectivity beyond standard devices, such as desktops, laptops, smartphones and tablets, to any range of traditionally dumb or non-internet-enabled physical devices and everyday objects. Embedded with technology, these devices can communicate and interact over the internet, and they can be remotely monitored and controlled.
Consumer connected devices include smart TVs, smart speakers, toys, wearables and smart appliances. Smart meters, commercial security systems and smart city technologies — such as those used to monitor traffic and weather conditions — are examples of industrial and enterprise IoT devices. Other technologies, including smart air conditioning, smart thermostats, smart lighting and smart security, span home, enterprise and industrial uses.
In a smart home, for example, a user arrives home and their car communicates with the garage to open the door. Once inside, the thermostat is already adjusted to their preferred temperature, and the lighting is set to a lower intensity and their chosen colour for relaxation.
The article stated that one study by telecommunications giant Ericsson projected that there will be around 29 billion connected devices by 2022, of which 18 billion will be related to IoT.
“These days, we are operating in what I call a ‘plug-and-play’ environment where you just buy a device, plug it in and it works – but the trouble is security,” said Power.
“These products have all got settings that can be adjusted but if a customer or business uses them without changing the default username and password then all a criminal has to do is run an algorithm to find any devices in the area which are still operating on the default settings,” he explained.
Power also stresses, with the rapid expansion of IoT devices, brokers play an integral role in educating their clients on the risks they face.
“The insurance broker is the trusted advisor to businesses and it’s their role to make sure clients are aware of their exposure,” he said.