By Zainab Iwayemi
With the rapid transition in digitization over the past months, businesses and organisations are getting accustomed to the new order, the Nigerian insurance industry seem to be served a portion of this development as insurance firms have learnt to adopt the use of technology in abetting the distribution of insurance products. Consequently, as much as digitization plays a key role in advancing the insurance industry, it is established that the growth of digital economy likewise, hinges largely on the involvement in insurance especially with the rising rate of cyber threats.
A recent study by Moody’s shows that price of cyber insurance is on the rise due to an increase in ransomware claims, which has significantly led to low double-digit rate increases across the board in addition to steeper increases for loss-hit accounts. Some experts within the insurance space opined that the world is starting to pay attention to cyber-risk, and Nigeria seems to have joined the league. Hence, signaling the need to step up insurance around digitization.
“In Nigeria, as it is globally, insurers have been building knowledge and expertise necessary for the preventive and response management of cyber risks within the frameworks that have been provided by Nigerian Information and Technology Development Agency (NITDA), Central Bank of Nigeria (CBN) and Nigerian Communications Commission (NCC),” Ekerete Ola Gam-Ikon, a consultant in management, strategy and insurance said.
“Interestingly, the National Insurance Commission (NAICOM) is also working towards an industry position in its strategic plan for the next five years,” he added.
But for insurance companies, the vulnerability of businesses to cyber threat has turned out to be opportunity for those who are able to up their games by repackaging cyber insurance products in a way that is attractive to business operators who need to protect vital information against cyber risk. Thus, some of these insurance firms are looking closely at new businesses in addition to adding further underwriting criteria to address increasing claims. Moody’s report shows that even commercial insurers and reinsurers seem to have deepened exposure to cyber insurance by shifting cyber risk to standalone policies or exclusions in traditional policies.
Advances in digitization, translates to greater speed, and more efficacies in the use of digital innovative solutions for individuals and businesses, however, Because cyberspace is broad, human errors and malicious attacks in the cyber world are almost impossible, hence the need to put in a place a system to mitigate such risk.
“There is the need to examine the preparedness of the insurance industry in Nigeria to provide individuals, businesses, and governments with the peace of mind they need to have if they lose personal data or customers and citizens are misled to record financial losses while engaging online, especially as our work environments continue to change, due to the response to COVID-19 pandemic.” Ekerete said.