Regulators and governments can work with the insurance industry to develop the cyber product through data sharing and consumer education, said Celyeste Power, IBC’s executive vice president of strategic initiatives and advocacy during a Canadian Underwriter webinar.
“We think governments and regulators do play an important role in this,” said Power. “There’s a big role on data sharing. There’s also a big voice that they play with the consumer, and we are hearing more and more that small-medium sized enterprises, unfortunately, aren’t as prepared as they could be to deal with cyber breaches.
“A role we think they could play is helping [the] industry, help businesses make sure that they are ready, that their toolkit is fully equipped, and that they’re prepared to sustain some of these breaches, so that they don’t have to use their insurance as their only option.”
Regulators acknowledge the cyber risk for consumers. In a speech at the BMO Capital Markets Digital Banking Summit, Peter Routledge of the Office of the Superintendent of Financial Institutions said some cyber products have yet to be regulated.
“Some new products, services and technologies that have been— and are being—introduced, remain outside of the regulatory system. They represent new risks but have the potential to unlock greater customer value for Canadians.”
While Routledge was addressing banking regulation, these comments translate to insurance as well.
“We want to avoid developing a new regulatory system for new technologies – we aim to have the regulatory environment evolve in lock-step with industry’s technological advancements. This, under the principle of same activity, same risk, same regulations,” Routledge said.
The industry can expect to see regulators to develop a regulatory standard in the near future, said one panellist.
“We’re definitely going to see standards for the supervision of cyber insurance. That’s going to come down to the international level,” said Stephen Simchak, vice president, head of international and counsel at American Property & Casualty Insurance Association. “If a government or regulator wants to get involved in the market, or wants to do something be helpful, I do think that there are issues of access to good data that can be used where governments can potentially partner with the industry.”
“Instead of perhaps having heavy regulation, [we should] look at how we can share data better, how can we educate the consumer better, the public better and make sure that the standards that we’re all achieving are adequate or realistic,” added Power.
Competition in the cyber market will be of benefit to consumers, she said.
“In terms of regulating the market from a consumer standpoint, we might actually see better consumer outcomes by leaving the market to grow and mature on its own, and let competition do the work,” said Power. “I think competition will sort of bring out the best consumer outcomes.”
Feature image by iStock.com/Peach_iStock
