The latest technological advancements could pose as an emerging threat to the insurance industry in the form of service risks and cyber-attacks, an industry panel has warned.
Speaking during InsuranceERM's Insurance Risk and Capital EMEA event in London today, Ruth Middleton, chief risk officer at AIG Life warned wearable devices and the Internet of Things (IoT) were particularly notable risks.
“We have seen these devices can be and have been used for distributed denial-of-service attacks and this is something we have to bear in mind.
“The problem you have with these devices is there is no basis for security embedded in their hardware so there is a limitation to what you can put into them in terms of cyber controls.
“There is also no legal precedent for who is liable with hacking of some these smart devices so you have to consider this.”
Middleton added to how increased data capture could lead to “industry disruptors” entering the market and noted Amazon’s Alexa, as an example of this.
The virtual assistant device “captures a lot of [voice] data into a cloud environment and this is being permanently analysed.
“Data mining of this could allow companies like Google and Amazon to be potential disruptive entrants into the insurance industry given the information they are gathering about people all of the time.”
Fellow panellist Anthony Brown, group risk director at Prudential, said the industry must find a balance when addressing emerging risks to ensure those that are relevant are dealt with, and maintain the organisation’s credibility.
“For example if I suggest taking a few weeks to look at the melting of the permafrost and putting a team on it, even though it may be a societal risk, it might not be relevant.
“One of the challenges is keeping the discipline of looking at something in the workshop which might be really interesting but might not be relevant to the company.
“We must try to look at the emerging risks which are going to hit you and being disciplined with which ones we put into stress tests.”
