Sompo Japan to offer cyberattack insurance with variable premiums

  • General Interest

Sompo Japan to offer cyberattack insurance with variable premiums

Sompo Japan Insurance will next year launch a policy in which premiums vary depending on readiness for potential cyber risk by companies with factories exposed to the internet of things, or IoT, Nikkei has learned.

Along with Hitachi Solutions, owned by Hitachi, Sompo Japan will consider how well such facilities are prepared to deal with potential cyber attack. If they take sufficient preventive measures to lessen risk, their insurance premiums will be reduced.

Amid the spread of the novel coronavirus, there is a growing demand for remotely operated devices to monitor factory activity. However, if such factories suffer a cyberattack, their owners will potentially pay a high price as a wider range of operations might have to be suspended.

Sompo Japan, a subsidiary of Sompo Holdings, will quantitatively measure the risk and reflect it in premiums. Hitachi Solutions, meanwhile, will be in charge of risk measurement by utilizing technology developed by US security company Palo Alto Networks.

Compared to fire and car insurance, cyberattack coverage is relatively new. As few companies have knowledge regarding how to properly measure such risk, insurance companies have calculated insurance premiums based on customers' industry and business scale.

Sompo Japan will change this model by collaborating with Hitachi Solutions to set appropriate premiums according to the unique risks of each customer. For example, if customers increase preventive measures a year after the contract takes effect, the insurance company will reduce premiums accordingly.

Further, Sompo Japan sees the new service being utilized beyond manufacturing by the infrastructure and medical industries as well.

In recent years, cyberattacks are becoming increasingly serious. And now as more and more people are working from home to curb the spread of the coronavirus, companies are even more exposed to cyberattack risk.

Japanese automaker Honda Motor experienced such an attack on June 8, which caused an hourlong suspension of operations at nine factories globally.

It is estimated that the market value of cyberattack insurance will reach $20 billion by 2025, with the coronavirus likely to further fuel the trend.

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Publication Date
Wed, 06/24/2020 - 01:28