Cyber Risk Insurance Policies: A Mandatory Path For Organizations In The Age of Artificial Intelligence
This has led to substantial financial losses, with vulnerabilities in institutional security, especially in financial sectors, becoming widespread, posing significant challenges to the security of both organizations and individuals.
Cost of Cybercrime is Skyrocketing
As the complexity of cyberattacks rises, the role of cybersecurity insurance has gained prominence as a proactive solution to safeguard digital assets across various types of organizations and mitigate potential losses from these attacks. According to estimates from the German market research firm Statista, the global cost of cybercrime is projected to reach approximately $9.2 trillion by the end of 2024, with expectations to climb to $15.6 trillion by 2029.
These challenges have compelled insurance companies to develop new products specifically designed to cover cyberattack risks faced by businesses. This includes launching insurance policies that address the challenges encountered by clients in various economic activities, particularly given the complete reliance on the internet as a primary tool for global business operations and the integral role of e-commerce in business models.
Insurance Products vs Cybercrime Threats
Experts and leaders in the insurance sector in Egypt highlighted the importance of insurance products against cybersecurity risks, noting that the primary challenge for companies lies in claims settlement and the need for skilled personnel knowledgeable in information security. They also discussed the role of AI in the insurance industry, which enables companies to accurately analyze the risks faced by clients and offer flexible insurance proposals based on their data.
They emphasized that these insurance policies require specific controls and procedures prior to risk assessment and evaluation, alongside the critical need for underwriters capable of accurately pricing these products. Additionally, the presence of experts specializing in claims settlement and damage assessment resulting from cyberattacks is essential, along with access to protection from international reinsurers.
The need for suitable insurance mechanisms tailored to the nature of the products and services offered by organizations was highlighted, particularly in instances where risks extend to the hacking of sensitive information or financial data belonging to clients, resulting in tangible harm.
The Egyptian digital transformation and cybersecurity platform, FollwoIct, quoted several leaders of Egyptian insurance companies and cybersecurity experts regarding the preparedness of insurance firms in Egypt to tackle cyber challenges, as well as their role in covering losses resulting from cyberattacks and the contribution of AI in detecting attacks and reducing losses.
IFE Role in the Industry
In this context, Alaa El Zoheiry, President of the Insurance Federation of Egypt (IFE), stated that the federation has approved numerous cybersecurity insurance products to keep pace with global developments in the insurance industry, affirming the readiness of Egyptian insurance companies to issue policies and operate these products.
He pointed out that the main challenge for insurance companies, both locally and globally, lies in claims settlement, which requires personnel with expertise in information security.
El Zoheiry explained that Egyptian insurance companies have formed numerous partnerships with specialized cybersecurity firms to leverage their expertise, in addition to learning from global experiences in this field.
He noted that the insurance sector in Egypt is undergoing significant digital transformation, with insurance services relying on risk distribution to meet client needs. He emphasized that increasing investments in information security have become part of mandatory insurance, including cybersecurity.
El Zoheiry added that AI aids in expediting processes, analyzing data, and settling claims, highlighting its capability to analyze thousands of transactions in minutes, thereby supporting accurate decision-making.
Concerning coverage for the costs associated with losses from attacks, the President of the Egyptian Insurance Federation noted that insurance policies cover all losses resulting from cyberattacks, including the costs associated with restoring data for companies or institutions.
Expanding Activities To Keep Pace with Tech Leaps
Omar Gouda, Managing Director and CEO of Misr Insurance Company, stated that his company is considering expanding its coverage for cybersecurity risks due to the significant technological advancements witnessed globally in recent years.
He continued that the damages and losses resulting from cybersecurity risks and cyberattacks on companies are severe and diverse, potentially exceeding those from traditional risks. Therefore, the company is focusing on expanding its insurance coverage related to cybersecurity due to its varied financial impacts on businesses.
Gouda emphasized that Misr Insurance Company is committed to achieving financial and insurance inclusion and sustainable development, enhancing human expertise, and training employees to keep pace with developments in the insurance industry.
He further explained that the company offers the ability to conduct inspections and payments electronically and settle claims digitally, adding that the company’s strategy aims to reach a broader customer base at a lower cost while emphasizing the importance of citizens’ digital identities in supporting digital transformation.
He pointed out that Misr Insurance Company is adopting a comprehensive digital transformation plan, which is currently one of its top priorities, to facilitate procedures for clients and make the insurance process faster, more flexible, and secure.
Cyber Risk Insurance is Vital
Meanwhile, Mahmoud Dahshan, Head of IT at GIG Egypt Life Takaful, views cyber risk insurance as an emerging coverage designed to protect companies and individuals engaged in online activities from the risks associated with IT infrastructure and cyberattacks. This coverage can be obtained through a special policy upon client request to compensate for damages resulting from the theft, loss, or destruction of personal or commercial data, or disruptions to communication channels such as websites, or financial theft through account breaches.
He noted that the banking, financial, technology, and healthcare sectors are among the key entities seeking to purchase cyber attack insurance policies, as they are particularly vulnerable to hacking risks due to their complete reliance on data and confidentiality.
Dahshan proposed that sector entities should analyze the cyberattacks they face and assess the impact of losses without coverage compared to insured institutions, which would encourage more effective technical promotion of insurance products.
Regarding the role of AI in the insurance industry, Dahshan highlighted that digital insurance facilitates smoother transactions in the sector, saving clients time and effort while maintaining their trust and satisfaction with the level of services provided. He noted that chatbots are increasingly used in the insurance industry to provide instant responses to customer inquiries regarding pricing or claims settlement processes, supported by AI technologies.
He indicated that AI in the insurance sector improves claims settlement processes by quickly analyzing images and videos submitted by clients related to incidents, such as auto insurance claims, to determine whether compensation is warranted. It also enhances underwriting processes by employing modern technological tools like machine learning, enabling insurance companies to accurately assess the risks faced by clients and offer flexible insurance proposals based on client data.
A Foreseen Growth
According to a report by Research and Markets, the global digital insurance market is expected to grow from $10.4 billion in 2020 to $58.1 billion by 2030, with a compound annual growth rate of 18.2%.
Dahshan affirmed that digitization helps reduce operational costs, allowing insurance companies to lower expenses and speed up transactions associated with manual processes, such as document management and inter-departmental communications.
Global reports indicate that companies using AI in processing insurance claims can reduce the time taken in this process by up to 70%.
He added that a report from Accenture predicts that the adoption of AI could yield financial savings ranging from $1.2 billion to $1.5 billion annually for the insurance industry by 2025.
Moreover, he noted that the use of blockchain technology to secure transactions between companies and clients allows various parties—such as insurance companies, doctors, and hospitals—to share data securely, reliably, and electronically, reducing manipulation and increasing transaction accuracy.
He emphasized that relying on cloud computing to facilitate access to data and reports helps companies provide secure and flexible insurance services, explaining that the use of big data in insurance allows for accurate pricing of products based on detailed data analyses.
By analyzing big data, insurance companies can reduce pricing errors by 50% compared to traditional systems, ensuring that the company receives a fair and adequate premium commensurate with the risk.
Online Insurance on Rise
He stated that online insurance is witnessing continuous growth, with digital systems expected to account for about 40% of all insurance transactions by 2025. In markets such as Asia and Africa, the adoption rate of digital insurance has increased by 15% annually in recent years, reflecting a growing reliance on digital platforms in these regions.
In India, the mobile insurance market is expected to grow by 30% annually, with the number of users projected to reach 130 million this year.
Insurance Companies Need To Tap Online Tools
In this regard, Hany Moussa, Senior Cloud Development Manager at eFinance, emphasized that rapid technological advancements require the insurance sector to adapt to achieve success and sustainability.
He confirmed that technology plays a crucial role in enhancing efficiency and providing better services through AI, data analysis, and mobile applications, noting that insurance companies can benefit from this development, particularly in cybersecurity insurance.
He mentioned that insurance companies have taken developmental steps, including investing in technology to improve customer experience through digital services and using data analysis tools to better understand their needs. He added that electronic platforms are being developed to allow clients to manage their policies easily.
Moussa pointed out that the Financial Regulatory Authority faces the challenge of balancing the encouragement of technology in the sector while ensuring its stability through regulations that guarantee the safe and effective use of technologies.
He noted that collaboration with companies operating in the fields of fintech and cybersecurity enhances the ability of insurance companies to provide solutions to mitigate cyberattacks, analyze data, and settle claims more flexibly.
Action Towards Boosting Cybersecurity
Sherif Yahia, Deputy Assistant Head of the Financial Regulatory Authority (FRA) , highlighted the launch of a circular on technical requirements aimed at establishing a foundation for digital transformation and enhancing cybersecurity, contributing to the Authority’s successful implementation of its plan to provide various electronic services.
He added that the Authority is developing a platform based on AI for testing in multiple areas, emphasizing the importance of a stable digital identity for citizens.
Challenging Scene
Rami Kalash, Head of Cybersecurity at Microsoft, stated that there is a fundamental shift in the global cybersecurity landscape, noting that attacks are no longer limited to independent individuals seeking to demonstrate their technical skills; they have evolved into organized groups relying on advanced tools, enabling them to execute attacks without needing sophisticated technical skills, complicating the challenge of countering them.
Kalash pointed out that attackers are now capable of rapidly generating and developing malicious code and using AI to create content that mimics official corporate communications or to devise methods to target individuals based on personal information extracted from social media.
He stressed the importance of institutions adopting the latest AI technologies and advanced security tools to face these growing challenges, emphasizing the need to raise cybersecurity awareness among both individuals and organizations.
Kalash explained that AI has become indispensable in modern defense systems, noting that the challenge lies not only in using AI but in maximizing its potential.
Suresh Balakrishnan, an advisory expert in Egyptian insurance, stated that the world is currently witnessing an increasing use of technological applications, emphasizing the need for swift implementation of electronic insurance to protect personal data and funds that may be lost due to unsafe dealings through electronic means and applications.
