Cyber insurance is entering the personal lines space, as cyber risk for individuals is increasing through the Internet of Things and hackers.
AIG has launched a cyber insurance policy for HNW individuals. The insurer, which holds a notable share of the cyber insurance market in the commercial space, has adapted its CyberEdge policy for businesses to create a cyber insurance product for individuals.
The new policy is called Family CyberEdge and is available to AIG’s private client group for HNW individuals. It will protect against threats including cyber extortion and cyber bullying, and according to the insurer will cover expenses related to data restoration, crisis, and reputation, among other claims.
Cyber insurance moving into the personal lines space has been inevitable as cyber risk for individuals is growing. Individuals are becoming more exposed to cybercrime through digital devices that can be connected to the internet. Homes and the appliances within them are becoming smarter and more connected as new ways to monitor and manage them are developed.
But any smart device has the potential to be hacked. Security cameras that can be used to help monitor a home could be hacked by cyber criminals to detect if a house is empty and commit a burglary. Smart doors and connected doorbells that allow a home owner to view and admit visitors through their phone could be hacked to permit a criminal entrance. Driverless cars are also at risk of hacking when they come onto the market.
Individuals are increasingly being targeted by cyber criminals. In July 2015, hackers targeted Ashley Madison, a dating site marketed specifically for users to arrange extramarital affairs. Data that held the personal details of 32 million users, including high-profile members, was not simply stolen but held for ransom. There have also been cases of hackers successfully targeting high-profile celebrities’ iClouds and distributing personal photos. These examples show that cyber-attacks are not exclusive to commercial businesses and that non-financial data is also incredibly sensitive.
Although AIG’s policy is initially only available for HNW individuals, its launch is likely just the beginning, and over time we expect that cyber insurance will also enter the mass market for personal lines.
By Danielle Cripps, General Insurance Analyst