From an insurance perspective, the insurable interest in the cyber space needs to be carefully determined and appraised. Put differently, in whose interest will insurance be considered and in the event of any loss, who will be compensated? While it is easy to identify legal entities like private organizations and Ministries, Departments and Agencies (MDAs) of government at Federal and State levels, common cyber incidents like hacking, phishing, breaches and theft of data have been known to have multiple effects that often require painstaking efforts and time to verify the sources.
As understood, cyberspace is a virtual global domain used by all but owned by no one and open to attacks or failures from anyone. The size and enormity of this space, often unimaginable, became better appreciated as more people all over the world joined online platforms and downloaded apps for their use. Insurers are therefore keenly interested in determining the insurable interest in this domain when approached by users.
As we enjoy the speed, convenience and efficiency of adopting innovative digital solutions in our personal and business lives, our world becomes even more converged on the cloud and through servers that we are assured are secured. However, such speed with which the losses, damages and risks have increased due to human errors and malicious attacks in the cyber world have not failed to attract the attention of insurers.
The risks we live with have forced people to demand that insurance companies should develop solutions to predict and prevent risks rather than just wait for them to happen. A good note of how COVID-19 has created losses that are beyond the ability of insurance to address calls for stronger predictive actions when it comes to cyber risks.
Interestingly, cyber insurance as a product line in insurance, has been available since the late 1990s as third-party liability insurance, then into the early part of the next decade as direct coverage for incidents arising from the insured, and today as packaged coverages because damage to insured properties have been traced to cyberattacks and failures.
Typically, insurers would be hesitant in providing cover where there is concentration of risks â€“ a situation where many parties are connected in a manner that exposes higher probability of severity when the unexpected happens. This is how cyber risks have been understood amongst insurers, little wonder, they are slow at exploiting the seemingly huge opportunities for insurance in cyberspace.
Indeed, there have been regulatory discussions even beyond national boundaries to ensure that the evolving environment of cyber risks and cyber insurance are better monitored and evaluated to achieve effective collaborative actions against cybercrimes.
In Nigeria, as it is globally, insurers have been building knowledge and expertise necessary for the preventive and response management of cyber risks within the frameworks that have been provided by Nigerian Information and Technology Development Agency (NITDA), Central Bank of Nigeria (CBN) and Nigerian Communications Commission (NCC). Interestingly, the National Insurance Commission (NAICOM) is also working towards an industry position in its strategic plan for the next five years.
My intention is therefore to examine the preparedness of the insurance industry in Nigeria to provide individuals, businesses and governments with the peace of mind they need to have if they lose personal data or customers and citizens are misled to record financial losses while engaging online, especially as our work environments continue to change, due to the response to COVID-19 pandemic.
About two years ago, there was an event around this with a view to promoting cyber insurance as a product in the Nigerian market but it does not appear on the lists of insurance companies following information available on their websites.
It is a good time to advance whatever preliminary work has been done in this regard, possibly an industry-wide conference to enable stakeholders to have reasonably relevant knowledge before something goes amiss.
Currently, it is not impossible that incidents that have been reported as claims by policyholders may have been caused remotely by cyber risks yet attributed to other factors due to the lack of the knowledge of the related impact by failures in cyberspace.
What to expect now is that the Federal Ministry of Communications and Digital Economy and Nigerian Information and Technology Development Agency (NITDA) along with other regulatory authorities will set the codes and principles, which will enable NAICOM develop necessary guidelines for the underwriting of cyber risks.
Private organizations are reminded that their businesses are prone to emerging cyber risks and investing in tech solutions that prevent hackers is only one of the ways of protecting themselves and cyber insurance would be the appropriate remedy when there is unexpected damage to data and loss of information.
The times are dire but insurance has become more important!
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