More than one billion Internet of Things (IoT) devices and sensors will be installed in commercial buildings by the end of 2018. These so-called ‘smart buildings’ are more efficient and convenient than ever before, but they’re also much riskier.
Earlier this year, it was revealed a casino was hacked by cyber criminals through a ‘smart’ aquarium thermometer. This unlikely access point for a data breach proved effective as the hackers gained access to the casino’s IT network and ultimately got information from the casino’s high-roller database.
“IoT has created a new intersection between operational technology (OT) and information technology (IT),” said Joshua Motta, founder and CEO of technology-enabled cyber insurance solution, Coalition. “If an employee in a so-called ‘smart’ commercial building clicks on a phishing email and grants entry to a company’s IT network, now a hacker not only has access to the IT assets and the data that resides on that network, but they also have access and controls to the OT.
“As buildings are transformed into enormous computer systems, it’s no longer inconceivable that cyber criminals could gain access to and control HVAC, sprinkler, and refrigeration systems, or other mechanical processes. If not properly protected, unauthorized access of these systems could expose building owners and their occupants to risks of data breach, bodily harm, property damage, and even pollution.”
In light of the cyber challenges posed by IoT and ‘smart’ buildings, Coalition has launched a new cyber insurance offering specifically designed to assist real estate developers, property managers, and other businesses across the real estate industry.
The new product, Coalition for Real Estate, contains customized policy language and includes coverage for data breach, bodily injury, property damage, and pollution in the event of a security failure – things that would normally be excluded on a traditional cyber policy. Other features include ‘smart’ building risk assessment and remediation assistance, premium discounts for those with strong security measures and controls, and access to a number of Coalition cyber security tools and apps.
“One of our frustrations with cyber insurance in general is that it doesn’t cover all of the actual cyber exposures. At Coalition, we think OT-heavy industries like real estate, hospitality, transportation, aviation, manufacturing and so forth have lots of catastrophic cyber exposures that are not adequately protected by the cyber insurance products that exist today,” Motta told Insurance Business.
“Everything’s a computer these days, which means that businesses have cyber exposures well beyond data breach. If a hacker taps into a connected elevator system in a hotel, it can cause forms of loss beyond data breach, such as bodily harm or property damage. Most cyber liability policies contain exclusions against those loss triggers, but we’ve removed those exclusions on our Coalition for Real Estate policy form.”
It is possible for commercial entities to gain coverage for property damage, bodily harm, and business interruption in a traditional property insurance policy. What property policies don’t cover are the bespoke elements of a cyber insurance policy, such as forensic costs, crisis management, PR assistance, breach notification costs, and digital asset restoration. That’s where Coalition for Real Estate comes into its own, according to Motta.