The commercial insurance industry is facing a significant challenge ‚Äî one that many are confident it will meet ‚Äî as maritime companies move toward adapting their navigational, operational and other equipment to the Internet. As noted on page 1, these companies face significant cyber threats as they make the transition.
And while such automation could create significant savings, hooking up to the digital equipment poses significant risks by leaving shipping and other maritime firms vulnerable to hackers, who can wreak considerable damage.
In the marine world alone, the problems this can engender include dangerous disruptions in communications, piracy and even the destruction of ships.
All this is part of the more general trend that has been dubbed the ‚ÄúInternet of Things,‚Äù a phrase experts predict we’ll hear a lot more.
Generally speaking, though, traditional marine insurance does not cover the possible bodily injury and property damage that can happen when computer network connections go awry, whether through maliciousness or by accident.
As experts say, the emphasis on cyber coverage to date has tended to focus on issues of privacy and the disclosure of personally identifiable information.
But, thankfully, the insurance industry is starting to see the need for coverage that compensates for the bodily injury and property damage that cyber risks can cause.
One promising sign of this is American International Group Inc.’s introduction of its CyberEdge PC policy, which is meant to augment customers’ existing commercial lines program and covers both property damage and bodily injury exposures on an excess and difference-in-conditions basis. Other coverage offered generally is manuscripted.
More such insurance products that address marine risks, as well as those in other industries, are expected as awareness of the cyber-related risks inherent in the ‚ÄúInternet of Things‚Äù grows.
Meanwhile, we await the coverage that the insurance industry’s creative and fertile minds develop to meet this latest challenge.