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.