Commercial lines insurers need to step up or face regulation: Forgeron
Businesses are vulnerable to cyber attack, but many are having trouble finding and keeping adequate insurance. Although commercial insurance is a largely unregulated space, the number of risks and challenges emerging will almost certainly attract the attention of regulators, policy makers and other decision makers if the industry does not step up and show that it can provide insurance to every industry in Canada, says Don Forgeron, president and CEO of the Insurance Bureau of Canada (IBC).
“A world in which certain Canadian businesses can’t find or can’t afford the insurance they need is politically untenable. It doesn’t work,” he told those gathered at a recent commercial insurance symposium hosted by IBC. “Government will not stand by and allow it to happen. Policy makers will quickly conclude if the industry can’t get its act together on its own, we’ll have to step in and fix things for them – with laws, rules and regulations.”
Data, network and privacy protection
Data, network and privacy protection in particular, is something companies need to consider when contemplating the evolving nature of catastrophes, he says, pointing out that companies now need to consider security and cyber risks at a catastrophic level – a threat that is constantly evolving, making it difficult to model with accuracy.
“We need to stay on top of this. We need to make sure we’ve got the people we need to understand, assess and price the risk involved in cyber-related activities. We need to help our commercial clients better grasp and manage their potential vulnerabilities, and protect themselves in the event of a breach,” he says, adding that the implementation of 5G wireless technology will only make matters worse in the years to come.
Many evolving concerns
To better understand the risk, the IBC commissioned a fact-finding survey that found more than 40 per cent of companies with fewer than 500 employees have no defenses at all against potential cyber intrusions. A full 60 per cent said they had no insurance to help them recover from an attack. “This is just one of the many evolving concerns in commercial insurance.”
“Right now there is a growing focus among governments to better protect the privacy of individuals and guard against attacks on data,” he adds. “We all have a role to play in demonstrating to government that the commercial market is responsive and adaptable, and more than capable of handling its own issues without intervention or strict guidelines.”