The cyber security insurance industry must adapt and thrive in Israel
Tel Aviv start-up Cyberwrite has started to develop an underwriting platform for cyber insurance policies.
By BOB MASON/FXEMPIREUpdated: DECEMBER 5, 2017 12:49A copy of bitcoin standing on PC motherboard is seen in this illustration picture(photo credit: REUTERS/ DADO RUVIC)
Cyber warfare and cybercrimes have become an everyday part of life for governments and companies across the world. The media has covered some of the cyber-attacks that have led to the leaking of personal data and then there is WikiLeaks of course, established by Julian Assange in late 2006.Governments will be particularly eager to, not only avoid an attack by WikiLeaks but also from enemies within the region and beyond. Some governments including China, Iran and North Korea have spared no expense in advancing cyber warfare capabilities.In terms of offensive cyberwarfare capabilities, Israel has been ranked 2nd in the league table and may take comfort from the fact that its biggest ally, the US sits at the top. Unfortunately, just below is perhaps Israel’s biggest enemy, that being Iran.The need for protection against cyber-attacks has never been greater and the nations that are most susceptible to cyber-attacks tend to be those that are actively involved in cyber offensives.At the beginning of this year, Israel’s electrical grid was hit by a cyber-attack and the cost to businesses alone from loss of power is significant. While it may be somewhat simpler for insurers to assess the loss of business over a given period from power outages, being able to assess the impact from the loss of data is an altogether different issue that insurance companies face today. Israeli counter-intelligence has regularly thwarted cyber-attacks in its nation, but companies, in particular, remain unprotected from the cost impact should one of the attacks succeed.Unsurprisingly, the number of cybersecurity companies has been on the rise in recent years. But, considering the cost to governments and companies, who experience a cyber-attack, the cyber insurance industry is somewhat nascent.When considering the fact that, according to Cybersecurity Ventures, the annual cost of cybercrime is estimated to double from 3 trillion dollars last year to 6 trillion dollars by 2021, there’s plenty of incentive for cybersecurity and cyber insurance companies to get in on the action.At the government level, work is already underway, with the US and Israel have created a cyber-working group tasked with the development of cyber defenses that are to be developed and tested in Israel and then shared with the US.Israel is also reportedly providing cybersecurity support to smaller countries and was reported to have exported 6.5 billion dollars in cyber security products last year alone and is considered to be the global leader in cybersecurity, with more than 300 cybersecurity start-ups in the nation. There is strong support from the Israeli government for cyber security companies and Israel’s prominence within the sector is all too evident.In a nation considered as a leader in cybersecurity, it comes as no surprise that cyber insurance is also on the rise. According to AIG Israel, the sale of cyber insurance has surged 30% year-on-year, with the insurance space benefitting from recent threats. While the increase in demand for insurance is evident, AIG reported that too few of Israel’s publicly traded companies have cyber insurance cover.This number is going to need to increase and Tel Aviv start-up Cyberwrite has started to develop an underwriting platform for cyber insurance policies. As estimates for cyber insurance premiums soar, Cyberwrite’s platform may well be yet another example of Israel’s ability to forge ahead in the cyber world. Companies with more advanced cybersecurity will more than likely benefit from more favorable insurance premiums than those that remain unconvinced of the need for the additional investment.Perhaps the fact that company directors are becoming more frequently liable to cyber-attacks is a more real incentive for the remaining publicly listed companies in Israel to, not only take on the additional security measures necessary, but also take up the appropriate cyber insurance policies.Could Blockchain be a Solution?Since the creation of Bitcoin, the tech world has taken its time to fully understand blockchain. While Bitcoin may be the headlines, blockchain is perhaps the punch line. Few if any industries are not actively exploring the possible use of blockchain technology and cyber security companies are no different.Considering the lack of regulation that cryptocurrencies enjoy, Bitcoin has yet to experience a cyber-attack. Blockchain’s defense against attack needs little debate.As cyber security capabilities become more advanced and companies explore the use of blockchain technology, amongst others, to protect data and remove the use of personal passwords to access centrally stored documents on inadequately protected servers, insurance companies are beginning to take note.It wouldn’t be too unreasonable to expect the Israeli government to come down hard on companies that are complacent and suffer from a costly cyber-attack. Not only would such an event be particularly dire for a company, but would also look bad for a nation that is considered a leader in the cyberspace.If there’s any doubt about the importance of cyber security to the Israeli government, the fact that Israeli Prime Minister Netanyahu delivered a speech at January’s cyber security conference should be evidence enough. Israel managed to walk away from the global cyber-attack at the start of the year, but to be blasé about such threats would be unwise and not just from a cost perspective.
