Local insurers still neglect network security insurance

Network security has grown into a pressing global issue, and Vietnam is not an exception. Aware of the growing concerns associated with current network security loopholes, many local firms are still unprepared to cope with the risk.

 

Only a few foreign insurers operate network security insurance services in Vietnam

A recent survey by PwC Vietnam, part of global professional services company PwC, shows that large-scale network security incidents are increasingly commonplace and trigger growing concerns among global consumers as well as governments.

In this context, many businesses, including those in Vietnam, are still lacking the necessary knowledge and skills on managing new risk related to network security in today’s complex digital technology era.

A PwC representative said that according to the survey results, up to 44 per cent of surveyed firms do not have an overall strategy on information security, 48 per cent do not have a training programme to raise awareness about network security among their staff, and 54 per cent do not have a compatible mechanism to confront hackers.

In fact, until now just a handful of foreign insurers, such as AIG, QBE or Chubb, have engaged in offering network security insurance products to their customers.

These insurance products might cover losses the customers incur in case of hacker or virus attacks or the expenses put into amending and replacing companies’ information technology system after network security incident occurrences, and more.

“As this is a fresh and specific product line, the insurance policies are still modest in number. Only several dozen such policies have been registered until present,” said the representative of a foreign insurer currently deploying the service.

“The market has proven to hold great potential as not many insurers have engaged in providing the service. In fact, in developed markets insurance premiums from network security insurance products began to increase in recent years only,” the source added.

According to industry experts, data and network security insurance was introduced by international insurers in the late 1990s.

The service stemmed from the ICT companies and services firms who wanted to protect themselves from computer viruses and losing customer information.

A survey by Aon, a global London-based professional services firm, shows that in 2015 global network security insurance premiums reached approximately $1.7 billion and reach an estimated $2.3 billion in 2016, growing about 30 per cent annually during 2011-2015.

In Asia, after the recent WannaCry ransomware attacks, the demand for such insurance products has increased sharply.

According to Japan Network Security Association (JNSA), the network security insurance portfolio of Japan’s three leading non-insurers surpassed 1,000 products last year.

In 2017’s first quarters, the insurance premiums from this segment at some Japanese insurers rose by three to five folds on-year.

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By Ngoc Lan