Hacks and attacks worry Australian insurers

[Audrey McNeil <audrey () riskbasedsecurity com>]

http://www.theage.com.au/business/hacks-and-attacks-worry-australian-insurers-20150828-gj9s0z

Cyber attacks have been singled out as the biggest risk feared by
Australian insurers over the next few years, as companies battle
increasingly difficult business conditions including a worsening economy.

That is the finding of PwC latest survey into the risks facing insurers
across the globe, which also noted macroeconomic worries came in a close
second for Australian insurance companies posting sluggish business growth.

The PwC Insurance Banana Skins 2015 survey found responses from Australian
insurers were dominated by concerns around technology with many bemoaning a
lack of innovation in the industry.

Cyber risk – including hacks and attacks on companies' systems – have
climbed from 19th place to become the worst fear of insurers in just four
years, according to Scott Fergusson, insurance team leader at PwC Australia.

"We've seen some survey commentary from participants showing up to 20 hack
attempts a day [on the insurance company] in Australia," he said.

"It's more about hackers who want to get hold of people's personal
information or credit card information. Insurers are pretty rich with that
data."

Worries about cyber risks come after high profile attacks on global
companies including the notorious case of "cheating" website, Ashley
Madison, being hacked. Other groups such as retail giant Target in the US
have been the victim of malware and security breaches that saw 40 million
customer credit card numbers stolen.

Japanese conglomerate Sony was prey to cyber attacks late last year.
Hackers from North Korea were widely believed to have been behind the
attacks on the global group.

Technology cost at forefront

Technology has been at the forefront for an increasing number of Australian
insurers, including the $12.6 billion Insurance Australia Group.

Last month, the company appointed former commercial insurance boss Peter
Harmer to the role as CEO of its new digital innovation hub as IAG ramps up
its technology drive. Others, such as QBE Insurance Group, have been
introducing technology-based insurance products including telematics
insurance to Australian customers.

"The results for Australia show that the change and the adoption, and use …
of technology is pervasive in what insurers are doing. The more they have a
technology interface with the outside world, the more that creates an
exposure … a broader face in which hackers can have a go," Mr Fergusson
said.

The PwC survey found that regulation, which was a hot topic among local
insurers two years ago, has fallen on the risk ladder as companies finish
bedding down LAGIC changes in their businesses.

Distribution channels, business practices and political interference made
up the top five worries flagged by companies over the next two years.
Regulation and macroeconomic woes were the top risks singled out by
companies outside of Australia.

Stephen O'Hearn, global insurance leader at PwC, said cyber risk risk was
the "number one banana skin" for non-life insurers, as well as being high
up the list for reinsurers and life insurers.

"As more and more business moves to online and mobile channels, insurers'
vulnerabilities to hacking, fraud and data compromise continue to mount,"
he wrote in the report.

"It's vital that boards take the lead in evaluating and tackling cyber risk
within their data and systems infrastructure, rather than seeing this as
solely a matter for IT."

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