Only one-third of insurers in the London market believes their firm could withstand a major cyber attack, and almost half felt they were underprepared, according to a survey conducted by Xchanging plc, the U.K. business technology and services provider.
Insurers, like many other businesses that hold vast amounts of client data, are vulnerable to attack by cyber criminals, and reports of data breaches are becoming increasingly regular occurrences, the company said.
Xchanging pointed to figures quoted by the U.K. government in September, which revealed that 74 percent of small businesses, and 90 percent of major businesses, had a cyber breach of security in the previous year.
Thirty-six percent of respondents to the survey, which was conducted at the Xchanging London Market Conference 2015 this month, said they “definitely” have sufficient measures in place to withstand a major cyber attack.
However, 30 percent of respondents felt they are only partially protected, 16 percent said they are insufficiently protected, and 18 percent were unsure.
Xchanging’s digital survey gathered the views of 70 delegates on the risks and challenges facing the Lloyd’s and London Markets, including their perception of London’s future position as a global insurance center.
“The insurance industry is grappling with the extensive threat of cyber attacks from an underwriting and risk management perspective and, in the absence of enough meaningful data, modeling the risks involved remains a grave challenge,” said Adrian Guttridge, executive director of Xchanging Global Insurance Services.
“As custodians of vast amounts of data, insurers are also aware that they, too, are vulnerable to cyber breaches – and the reputational damage that this can cause,” he added.
“The recent cyber attack on TalkTalk [the U.K. telecommunications provider] is the latest in a lengthy list of high-profile hacks of personal data held by government and commercial organizations, Guttridge explained.
“Insurance companies must take very seriously the extent of the risks they face and ensure their cyber security measures are constantly reviewed and updated. They should also be mindful that, in some areas, a collaborative, industry approach in which knowledge and skills are shared among peers, may be the most effective way to strengthen cyber defenses,” he went on to say.
Since becoming authorized by the U.K.’s National Cyber Security Programme’s Cyber Essentials scheme in February 2015, Xchanging has been sharing technological expertise with other companies to help them understand their exposure to common cyber threats, the company said. (Cyber Essentials is a U.K. government-backed and industry supported scheme to guide businesses in protecting themselves against cyber threats.)
Xchanging’s Cyber Security Assessment uses the program’s 10 Steps to Cyber Security Guidance process to work in collaboration with customers to understand their cyber security structure, align it to their business requirements and to quantify possible vulnerabilities.
The results enable firms to identify key areas of improvement and actions that may be taken to bolster security and reduce cyber risks.
London’s Position as Insurance Center
When asked to rank in order of importance the factors making London less competitive than other global insurance hubs:
- Cost came out as number one (30 percent)
- Lack of modernization (27 percent), and increasing regulation (27 percent), took joint second place
- Competing expertise in overseas hubs (16 percent) was seen as having the least impact.
The theme of the conference was “Embracing Global Change,” with a focus on London’s need to modernize and offer the right products, services and processes, Xchanging said.
Guttridge commented: “The skills and entrepreneurship within the London Market have secured its ongoing position at the forefront of the global insurance industry but its pre-eminence is undoubtedly under threat from various existing and emerging markets. It is reassuring therefore, to see the huge commitment within the market for a continued program of modernization, including the timely implementation of the Target Operating Model (TOM), which aims to put London on an equal footing with younger markets such as Singapore when it comes to efficiency and straight-through trading.”
The Xchanging survey found that Singapore was chosen from a list of five as “the insurance hub likely to expand the most in the next five years.”
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