The Importance of Cyber Insurance in the Emerging Cyber Ecosystem
The insurable interest in cyberspace must be properly assessed and appraised from an insurance standpoint. To put it another way, in whose interests will insurance be considered, and who will be compensated in the event of a loss? While legal entities such as private organizations and government Ministries, Departments, and Agencies (MDAs) at the Federal and State levels are easy to identify, common cyber incidents such as hacking, phishing, breaches, and data theft have been known to have multiple effects that often necessitate time and effort to verify the sources.
As previously said, cyberspace is a virtual global domain that is used by everyone but is not owned by anybody and is vulnerable to attacks or failures from anyone. As more people around the world joined online platforms and downloaded apps for their use, the vastness and enormity of this area, which was previously inconceivable, became more apparent. When approached by users, insurers are particularly interested in determining the insurable interest in this subject.
Our world becomes even more converged on the cloud and on servers that we are certain are secure while we enjoy the speed, convenience, and efficiency of embracing innovative digital solutions in our personal and professional life. However, the rapid increase in losses, damages, and hazards in the cyber world as a result of human errors and hostile attacks has not gone unnoticed by insurers.
People have demanded that insurance companies develop ways to forecast and prevent hazards rather than simply waiting for them to occur as a result of the risks we face. A solid observation of how COVID-19 has resulted in losses that insurance companies are unable to handle begs for stronger anticipatory actions when it comes to COVID-19.
Cyber insurance has been available as a product line in insurance since the late 1990s as third-party liability insurance, then as direct coverage for incidents arising from the insured into the early part of the next decade, and now as packaged coverages because damage to insured properties has been traced to cyberattacks and failures.
In most cases, insurers are unwilling to provide coverage where there is a high concentration of risks, such as when several parties are connected in a way that reveals a higher possibility of severity when the unexpected occurs. Because insurers have a limited understanding of cyber dangers, it's no surprise that they are slow to capitalize on the seemingly limitless prospects for insurance in online.
Indeed, regulatory conversations have taken place across national borders to ensure that the growing environment of cyber risks and cyber insurance is effectively monitored and analyzed in order to achieve successful collaborative cybercrime responses.
Insurers have been developing the knowledge and expertise needed for the prevention and response management of cyber risks in Nigeria, as well as around the world, within the frameworks provided by the Nigerian Information and Technology Development Agency (NITDA), the Central Bank of Nigeria (CBN), and the Nigerian Communications Commission (NCC). Surprisingly, the National Insurance Commission (NAICOM) is also pursuing an industry position in its five-year strategic plan.
My goal is to investigate the insurance industry's readiness in Nigeria to provide individuals, businesses, and governments with the peace of mind they require if personal data is lost or customers and citizens are misled to record financial losses while engaging online, especially as our work environments continue to change as a result of the COVID-19 pandemic response.
There was an event about two years ago with the goal of promoting cyber insurance as a product in the Nigerian market, but it does not appear on the lists of insurance firms based on information on their websites.
It's a good moment to move forward with any preliminary work that's been done in this area, perhaps by holding an industry-wide conference to ensure that stakeholders have reasonably up-to-date information before something goes wrong.
Currently, it's not impossible that incidents reported as claims by policyholders were caused remotely by cyber hazards but attributed to other variables due to a lack of understanding of the impact of cyberspace failures.
What we can expect now is that the Federal Ministry of Communications and Digital Economy, as well as the Nigerian Information and Technology Development Agency (NITDA) and other regulatory agencies, will establish the codes and principles that will allow NAICOM to develop the necessary guidelines for cyber risk underwriting.
Private companies are reminded that their operations are vulnerable to rising cyber hazards, and that investing in technology to prevent hackers is only one approach to protect themselves. Cyber insurance would be the right remedy in the event of data loss or damage.
Although the circumstances are difficult, insurance has become increasingly necessary!