London insurance market underprepared for Talktalk-style cyberattack: Xchanging

A new digital survey from London, United Kingdom-based Xchanging plc, a business technology and services provider, has found that only one-third of insurers in the London market believe their firm could withstand a major cyberattack.

The survey, conducted at the Xchanging London Market Conference earlier this month, gathered the views of 70 delegates on the risks and challenges facing the Lloyd’s and London markets, including their perception of London’s future position as a global insurance centre. While 36% of respondents to the survey said they “definitely” have sufficient measures in place to withstand a major cyberattack, 30% felt they are only partially protected, 16% said they are insufficiently protected and 18% were unsure.

As holders of vast amounts of client data, insurers, like many other businesses, are vulnerable to attack by cyber criminals, and reports of data breaches – such as the hacking of broadband provider TalkTalk last month – are becoming increasingly regular occurrences, Xchanging said in a press release on Monday. Figures quoted by the U.K. government in September revealed that 74% of small businesses and 90% of major businesses had a cyber breach of security in the previous year.

“The insurance industry is grappling with the extensive threat of cyberattacks from an underwriting and risk management perspective and, in the absence of enough meaningful data, modelling the risks involved remains a grave challenge,” said Adrian Guttridge, executive director of Xchanging Global Insurance Services, in the release. “As custodians of vast amounts of data, insurers are also aware that they, too, are vulnerable to cyber breaches – and the reputational damage that this can cause.”

Guttridge added that “insurance companies must take very seriously the extent of the risks they face and ensure their cyber security measures are constantly reviewed and updated. They should also be mindful that, in some areas, a collaborative, industry approach in which knowledge and skills are shared among peers, may be the most effective way to strengthen cyber defences.”

With the recent wave of mergers and acquisitions (M&A) in the insurance industry, according to the poll, more than one-third (37%) of the market believes that massive job losses will be the single biggest impact of M&A activity among insurance companies. This was followed by cost efficiency (31%), loss of well-known names (26%) and stable prices (6%).

And with Solvency II going live in less than two months, 86% of respondents said they are confident that their organization is fully compliant with upcoming regulation.