Expert view: Pernicious cybercrime

Cybercrime is one of the hottest stories in the media. In the UK, the Office for National Statistics (ONS) reported 5.6 million incidents of fraud and cybercrime last year.

According to the ONS, this included a 39% increase in fraud on UK-issued bank and credit cards, resulting in losses worth approximately $118 million. The UK is by far the biggest target, as the second worst-hit countries were Greece and Denmark. These two nations ‘only’ experienced a 5% rise in losses.

Of course, the growth in cybercrime is a direct consequence of our increasingly connected ‘smartphone’ society. So much of our data now sits on a cloud server somewhere and our personal devices are all connected to each other. It’s a rich seam for fraudsters and hackers to mine. For a long time, companies have been at risk from cyber-attacks, but criminals are increasingly turning their attention to consumers, partly because they are more susceptible in part because their devices seldom offer adequate protection as standard.

Examples of how consumers are targeted include keylogging (a computer programme records every key-stroke made by the user), phishing (obtaining sensitive information for example, usernames and passwords, bank details) or brute-force attack (a trial and error method used by application programmes to decode encrypted data).

Insurers have responded to cybercrime in the commercial and SME sector, developing a new line of business considered to have great growth potential. Often overlooked, cyber insurance for the individual and their family is a significant untapped opportunity too. As well as risks from fraudsters after their cash, other risks include online bullying, the loss of memories and online/media liability.

There are a number of product possibilities: family protection against liability from internet behaviour such as cyber bullying, defamation, lack of security; protection for online purchases where goods fail to arrive or online credit is lost; financial protection when fraud is not covered by banks/card issuers; advice and support after an incident, all to provide peace of mind that families and individuals will be protected against internet criminals 

The challenge is to work out how to make the product set marketable and what personal lines customers are prepared to pay for. Cyber is likely to be sold as a fixed price add-on product, with limited customer input at point of sale, making compelling headline covers critical. However, cover needs to be family-wide and backed up by high service quality to provide the product with longevity

Insurers should be open to innovative distribution channels, and to continuous development as the types of cover needed will change rapidly. One thing is clear: there is a value attached to cyber insurance, and insurers have a leading part to play in both protecting and educating the public in how to protect themselves against this most pernicious of crimes.