Cyber risk cost and management in IoT devices-linked health insurance
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Cyber risk cost and management in IoT devices‑linked health insurance Yin‑Yee Leong1 · Yen‑Chih Chen1 Received: 14 September 2019 / Accepted: 16 January 2020 © The Geneva Association 2020
Abstract Internet of things (IoT) devices lead to innovation trends in financial services. Realworld IoT applications certainly further the surge in new financial product design. In the insurance industry, companies can utilise data collected from all types of IoTconnected devices to more effectively determine premiums and provide better insurance products, known as IoT insurance. However, this has a downside: insurance companies might underestimate the possible cyber risks involved in these IoT insurance products. This study examines the potential cyber risks arising from the application of IoT devices-linked insurance. We consider the cyber risks in insurance product valuation and estimate the possible increase in cyber risk cost as more data are sourced from IoT devices. Our results contribute to IoT devices-linked health insurance development and improvement in related cyber risk management. Keywords Cyber risk · IoT insurance · Health insurance · Insurance technology
Introduction According to the Global Risks Report 2019 published by the World Economic Forum, cyber risk plays a major role in shaping the global risk landscape of individuals, governments and businesses. Cyber risks, such as cyberattacks leading to money and data theft and operational disruptions, seem to be increasing in both prevalence and disruptive potential (World Economic Forum 2019). With the growth of more complex and pervasive Internet of Things (IoT) applications and artificial intelligence technology, related data-driven services might be affected The authors would like to express their sincere gratitude to the Ministry of Science and Technology for the financial support. * Yen‑Chih Chen [email protected] 1
College of Finance, Feng Chia University, No. 100 Wenhwa Road, Seatwen District, Taichung City 40724, Taiwan, ROC Vol.:(0123456789)
Y.-Y. Leong, Y.-C. Chen
more severely, with the possibility of long-term effects. Insurance markets are far from immune to such trends and possible threats. Security breaches in the insurance industry can simultaneously affect information technology systems across the globe and result in multi-billion dollar claims by affected corporations, institutions or governments (Kaserer and Klein 2019). IoT is a transmission system of internet-connected devices that collects and shares data, including vital monitoring data, location data or other privacy-related information. With technical developments in wireless sensors, computing and communications, IoT devices are now commonplace (Madakam et al. 2015). These include wearable devices, smartphones, smart home devices and telematics systems in cars. IoT devices, which are already present in healthcare, can tag different kinds of objects for monitoring, identifying, automating and controlling (Gubbi et al. 2013). In recent years, life insurance companies increasin
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