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In a redevelopment plan that could shape future cities around the world, Google’s parent company Alphabet is proposing to transform a rundown section of Toronto’s waterfront into a fully connected hub. The tech giant hopes to “fundamentally refine what urban life can be” by wiring up everything from street lights to pavements and providing autonomous services like driverless shuttles and heat-monitoring streets that will melt ice and snow on contact.
Alphabet’s urban innovation organization Sidewalk Labs has partnered with a Canadian government agency known as Waterfront Toronto to hatch the redevelopment plans, which will initially include mid-rise apartments, offices, shops and a school on a 12-acre (4.9-hectare) site – a first step towards what they hope will eventually be an 800-acre (325-hectare) development.
However, while interest in the futuristic project is great, some Canadians have expressed concerns about data protection and the privacy implications of such a connected community – especially when the data will be filtered through one of the most data-hungry companies on the planet.
The Canadian Press recently reported that the prominent Toronto developer, Julie Di Lorenzo, resigned from the Waterfront Toronto board over the project, posing the question: “How can [Waterfront Toronto], a corporation established by three levels of democratically elected government, have shared values with a limited, for-profit company whose premise is embedded data collection?” Others have been quick to support Lorenzo’s sentiments, especially following a series of privacy scandals at Google and Facebook.
Marcyn Weryk, senior cyber underwriter at AXA XL, commented: “I do think the Toronto waterfront redevelopment plan presents a new set of privacy exposures for everybody involved. However, over the last few years there has been growing public understanding and acceptance of what privacy really means, and a lot of people are now willing to share information about themselves with providers – as long as they know what data is being collected and how it’s being used. As projects like this come into fruition, I would be less concerned about the fact that data is being collected and more concerned about how transparent any company collecting data is being about how they’re controlling and using that data.”
Most cyber insurance policies today contain quite broad privacy-related triggers, which will contemplate coverage for unintentional violations of privacy as long as there isn’t any criminal cause and effect, Weryk explained. As plans for the Toronto waterfront continue to progress, a key role of the insurance industry – especially among insurance brokers – is to provide continuous education on the regulatory landscape and how to manage data properly.
As well as throwing up privacy concerns, a fully wired-up and interconnected community could also harbor significant cyber liability exposures. What if a cyber criminal hacks into a robotic waste-sorting system causing it to eject waste missiles at passers-by? It sounds far-fetched, but who knows what risks the future holds? Also, if all of Sidewalk Labs’ tech-savvy plans are approved, who will be held liable if something does go wrong? All of these questions are still very much in the debate stage.
“A new vertical the insurance industry is concerned with is cyber-triggered bodily injury and property damages (BIPD),” Weryk told Insurance Business. “While we haven’t yet seen a tremendous amount of cyber-driven BIPD losses, it’s definitely a concern as the connectivity of buildings, cars and people continues to progress. There have been incidents of autonomous vehicles crashing, but so far, those incidents don’t seem to have been driven by technology failures but more by the circumstances around the incidents creating a risk.
“As for who holds the liability, I think the municipalities will have issue with delineating what’s just municipal responsibility versus the vendors who are being used to provide new services or the new ‘connected community’ that’s being planned for Toronto. I would imagine that any municipality supporting the development of a project like this will want to have some type of subrogation language in their contracts with the tech providers – in this case, Alphabet – to make sure they’re the ones holding the bag at the end of the day from a liability stand point.”
It’s important to remember the Toronto waterfront redevelopment project is still very much in the planning stage. Lauren Skelly, director of external affairs for Sidewalk Labs, called comments made by critics “premature and completely false”. She said: “We’ve been working closely with all three levels of government and the people of Toronto to develop a ground-breaking plan for an underused part of the Waterfront.
“It’s our hope that this plan will eventually lead to transforming the area into the most innovative, sustainable, affordable and forward-looking neighbourhood in the city. We’ve committed to working with Torontonians every step of the way, including on ensuring that this plan respects people’s privacy and data. To do that, we’ve consulted with thousands of Torontonians - and we’ll continue to do that to get it right.”
One can only hope that any privacy and liability concerns are completely ironed out and accepted by the city of Toronto before any redevelopment work gets underway. If the project does get the green light, the insurance industry is ready and waiting to provide coverage, Weryk noted.
“There are lots of incredibly innovative insurers, like AXA XL, who are willing and able to take on the underwriting of such risks,” he said. “The concept of what needs insuring in this redevelopment is actually very feasible. The only area of concern I can see is the availability of sufficient limits and the overall financial capacity needed to back a project like this. At present, I don’t think there’s enough capacity in the market to satisfy either Alphabet or the city of Toronto.”
