Securing the Internet of Things
Read the report.

While the Internet of Things (IoT) is just beginning to grab the media’s attention and will become far more prevalent in the years ahead, many industries already have significant experience with it. That experience tells us the IoT poses both challenges and opportunities for insurers—and that they cannot afford to miscalculate either.

As Accenture notes in its report, Security Call to Action—Preparing for the Internet of Things, the IoT is becoming an attractive target for cyber attackers. Cyber criminals are targeting all industry segments that utilize the IoT, which consists of every type of Internet-connected device. Indeed, respondents to recent World Economic Forum research say this vulnerability is their top IoT-related concern, eclipsing even the prospect of personal data breaches.

Since the Internet itself remains at risk, we cannot assume that the IoT will be secure any time soon. Moreover, because of the IoT’s sheer expanse and the diversity of industries utilizing it, there is no silver bullet for securing it. Further complicating matters is the fact that the security and privacy needs within industry, transportation, health and commercial implementations not only differ from one another considerably but also often conflict.

Those security challenges create substantial risk not only for industry but also for insurers. Carriers insuring customers that rely on the IoT either to run their operations or as an integral part of their products and services will have to account for cyber security risks during underwriting and pricing.

These risks, however, also create opportunities for insurers. Customers will need insurance to help them cover their losses. In addition, they will need assistance in mitigating their risks.

In this blog series, I will examine how insurers can manage IoT security risks as well as seize the opportunities that these risks present.

Next time: Managing IoT security challenges.

2 responses:

  1. John,

    It’s good to read that Accenture is considering how the Internet of Things raises security issues both known and unknown. Your piece triggers some thoughts about underwriting risk associated with the impact of “software” or “immaterial” affects on personal and commercial property in such a hyper-connected world. When one considers destruction or damage to property in such a context, the notion of what I call the “Complexes of Coverages” emerged in my mind, and with this are some really fascinating questions.

    • With the dynamics of the IoT in an open systems world, how will carriers rewrite policies for determining responsibility when a claim occurs for property damage to, let’s say, a car in an accident by a software glitch within a complex array of telematics? Who’s at fault? Driver, manufacturer, software provider(s) and developer(s), etc!?
    • Will product warranties become components of the risk models? What is Accenture’s thought leadership for homeowner products in the IoT CoC, when the entirety of the home is connected to multiple product and service providers outside its walls, from the security company monitoring services, to the remote tablet apps used by homeowners to manage multiple aspects of their home while away and theft resulted from them not using their security procedures to protect their belongings?
    • How does an adjuster unwind these tangled balls of yarn five to ten years from now and what do insurance companies need to change in their hiring profiles and education for employees in such a continuously tethered field or property and valuables?

    Lastly, I can imagine a scenario where the broad industry leadership and experience that Accenture has is led by insurance drawing upon the best from Communications and Hi-Tech, and Products (telematics in car and home), and focus on using the perpendicular assets form a vast realm of world class expertise and skills such as Accenture Digital and Analytics, Strategy, Technology Innovation, Leadership (SaaS, Cloud, Methodology, Claims, Duck Creek, etc.) to put forth a forward thinking, pragmatic and in-depth point of view on how to both help companies navigate this amazing journey, and leading them through the promises and mines on the paths ahead. It’s a beguiling time with many moral vagabonds taking advantage and exploiting these opportunities. It’s good to know that Accenture is again in the position of the wise Sherpa on such pathways as so many times before (client server, CRM, ERP, etc.)

    1. Mario,

      Thank you for your observations, which are right on point. In these early days of the Internet of Things, insurers and manufacturers—as well as regulators—must address a plethora of liability and security issues before additional technological advancements can become commercially viable. We’ve often said that in this respect, insurers are the essential enablers of innovation. One quickly approaching advancement, as you mentioned, is the autonomous automobile. Many auto industry players continue to study how to handle the variety of issues surrounding this advancement. But a few, such as Volvo, are taking the lead. The Swedish automaker recently announced it would assume liability for any accidents in which its autonomous automobiles are at fault We expect that a similar scene of market leaders and market laggards, against a backdrop of uncertain government regulation, will play out in other sectors. In the meantime, in blogs and longer viewpoints, Accenture will continue to explore the questions you have raised, as well as other ideas on how insurers should consider responding.

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