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Key takeaways
Key takeaways- Cyber security tops the 2015 list of insurance industry concerns in Australia.
- The issue has grown rapidly – rising from 19th place just four years ago.
- Report recommends a balanced approach between security and accessibility for customers.
Digital disruption should be viewed as both an opportunity and a threat. For Australian insurance companies however, it appears to be a greater source of anxiety than most.
In a report conducted by PwC, technology has dominated the list of concerns faced by the industry here, bucking the global results that put regulation and interest rates in the lead.
Perhaps spurred by high profile attacks on companies such as US health insurer Anthem, which lost 80 million customer records to hackers, as well as an increasing consumer awareness of security issues, cyber risk has been revealed as the Australian insurance industry’s biggest worry – rising from 19th place just four years ago.
It’s not without foundation: cyber attacks on US healthcare companies reportedly cost the industry US$6 billion per year, while one survey respondent in Australia claimed to be repelling “more than 20 serious attacks every day”.
Health insurers are particularly vulnerable. PwC’s Global State of Information Security Survey 2015 showed that detected cyber incidents against healthcare companies have increased by 60%. The proliferation of electronic records and the shift towards cloud data storage, coupled with the value of personal data to hackers (perceived as more lucrative than credit card details) means they are a prime target.
Insurance disruption
Product development, change management and distribution channels were also some of the top concerns flagged up by Australian insurance companies, reflecting an unease within the industry surrounding disruption and routes for innovation.
“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,” said Scott Fergusson, insurance team leader at PwC Australia.
“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. At the same time, it’s important to look at how cyber security can be strengthened without undermining the digitally-enabled ease and accessibility customers now expect,” recommends the report.
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