The scarcity of information is the main challenge facing loss adjusters in the Latin American cybercrime insurance segment, according to experts from global law firm Kennedys. After decades working for international carriers on Latin American & Caribbean claims from London and Madrid, Kennedys was the first international insurance law firm to open a boutique office in Miami in 2010 as a hub to manage claims, regulatory issues, policy analysis and audits across the region.
Cyber will be one of the topics at the 2016 Miami ‘ Latin American Claims (re) Insurance Forum, which is organized by Kennedys and accounting firm QLDG.
Info scarcity is main cyber challenge for loss adjusters in Latin America
Cyber products have just recently been offered and marketed in Latin America after we started seeing major cyber-attacks on European and American companies. There have also been cyber-attacks in the Latam region, especially hacktivism, but incomparable to those seen in Europe and the USA.
Cyber risks transform every day, evolving in a way such as to involve various components. For instance, there are hackers who are attacking mobile phones to illegally obtain intimate pictures from users who are then asked for a ransom in exchange for not publishing such pictures in also hacked social media. So insurers are now extending their cyber policies to cover extortion and ransom.
Even the hospitality business has not managed to escape from the cyber threat. We recently learned about Starwood being the target of hackers that were able to see debit and credit card information of clients who dined or shopped at 54 of the company’s hotels, including some Sheraton, Westin and W locations.
Meanwhile, insurers face their own operational risks, as they are also a target of cyber threats. This is due to the nature of the data stored from insurers on their daily operations which has made insurers a prime target for hackers as well. Paradoxically, insurers would require cyber insurance themselves.
Cyber criminals are constantly refining their techniques, especially through cross-border sharing of experiences and information, which makes it difficult for players in the cyber security landscape to keep pace. Scarcity of information stands as the main challenge considering that data about cyber breaches is not abundant in Latin America.
Adjusters in Latin America have been dealing with claims containing what we would call a “cyber-risk” element today for many years, as in our experience happens frequently when dealing with “Fidelity” losses. In all that regards the expertise to deal with the computer or data technology aspects of these claims, the adjuster can of course rely on international expertise. But interestingly, due to the fact that that international companies seeking to lower their costs have relied on Latin American human resources as a solution for their IT programs in past years, there is a large pool of local experts who are very well trained and have the know-how to assist claim handlers in the information and technology field. This is not to say that all is set for a big cyber-related claim. Of course, cyber risks are new to the world and it will take time to develop the same degree of specialty which now exists in regards to other insurance-related losses.
We at Kennedys recognize that the scale and type of cyber risks faced by insureds demands a comprehensive advice to our clients, international insurers. Our advice ranges from policy drafting to advising on compliance with data regulations, coverage issues, reducing exposure to unforeseen risks, reporting data breaches, cloud computing issues, amongst many others.
BNamericas was the exclusive media partner for the 2015 Latin American Claims (re) Insurance forum and will be so also for the 2016 Miami ‘ Latin American Claims (re) Insurance Forum.