Cyber Risk and Security
Increase in Smart Home Devices Adds New Hacking Risks
HSB Cyber Survey shows 81 percent of U.S. consumers live in connected homes
Hartford, CT (Jan. 26, 2017) – Eight out of ten U.S. consumers have a home data network and more than a third of them connect entertainment systems, gaming consoles and other smart devices to the Internet, increasing the risk of home cyber attacks, a survey by Zogby Analytics for The Hartford Steam Boiler Inspection and Insurance Company (HSB), part of Munich Re, reported today.
Of the 81 percent of consumers who said they have a WiFi or other home data network, 38 percent had electronic devices other than personal computers, smartphones or tablets connected to the Internet. The connected devices include smart televisions, music systems, thermostats, security cameras, door locks, alarms, lighting, home automation and other smart devices.
Although cyber attacks on non-computing home systems and smart appliances are so far relatively uncommon (10 percent of those responding were victims), the increase in connected devices is creating a new pathway for hackers and cyber thieves, the results showed.
"Cyber criminals are always looking for new targets," said Timothy Zeilman, vice president and counsel for HSB, a leading insurer of data and information risks, including cyber coverage for consumers. "And home devices like smart TVs and appliances are often designed for easy use and not security. Compounding the problem, many consumers don't take even basic measures such as changing default passwords and updating security software."
The most common type of non-physical damage experienced through attacks on home devices, appliances and systems were viruses or other unwanted software on their systems (59 percent) and damage to software or operating systems (45 percent).
Damage to home devices in a cyber-attack usually results in a financial loss, the survey showed, with 87 percent of the victims spending money to respond. The losses were often substantial — 42 percent of the victims in the survey spent between $1,000 and $5,000.
The problem will likely get worse as the number of connected home devices increases, Zeilman said. In response, new cyber insurance coverages are becoming available for consumers. Once offered only to businesses, cyber insurance for individuals can pay for expenses related to cyber attacks on home computers, home systems, and appliances and other connected devices, cyber extortion, data breach and online fraud.
Hartford Steam Boiler, a member of Munich Re's Risk Solutions family since 2009, is a leading specialty insurer providing equipment breakdown, other specialty coverages, inspection services and engineering-based risk management that set the standard for excellence worldwide. We focus on clients and partner with them to craft inventive insurance and service solutions to cover existing and emerging risks posed by technological change. Today, as throughout our 150 year history, our mission is to use our engineering knowledge and insights to help clients prevent loss, advance sustainable use of energy resources and build deeper relationships that benefit business, industry, public institutions and consumers. HSB holds A.M. Best Company's highest financial rating, A++ (Superior). For more information, visit www.hsb.com.
About Munich Re
Munich Re stands for exceptional solution-based expertise, consistent risk management, financial stability and client proximity. This is how Munich Re creates value for clients, shareholders and staff. In the financial year 2015, the Group – which combines primary insurance and reinsurance under one roof – achieved a profit of €3.1bn on premium income of over €50bn. It operates in all lines of insurance, with over 43,000 employees throughout the world. With premium income of around €28bn from reinsurance alone, it is one of the world's leading reinsurers. Especially when clients require solutions for complex risks, Munich Re is a much sought-after risk carrier. Its primary insurance operations are concentrated mainly in the ERGO Insurance Group, one of the leading insurance groups in Germany and Europe. ERGO is represented in over 30 countries worldwide and offers a comprehensive range of insurances, provision products and services. In 2015, ERGO posted premium income of €17.9bn. In international healthcare business, Munich Re pools its insurance and reinsurance operations, as well as related services, under the Munich Health brand. Munich Re's global investments (excluding insurance-related investments) amounting to €215bn are managed by MEAG, which also makes its competence available to private and institutional investors outside the Group.
SOURCE: Munich Re
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