Nav­i­gat­ing New Zealand’s space l aws

The in­sur­ance game is chang­ing, Delta In­sur­ance’s Ian Pol­lard says. And it’s not just re­spond­ing af­ter some­thing has hap­pened – it’s mak­ing sure noth­ing hap­pens in the first place.

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It’s a sad re­al­ity: if you have a com­puter, chances are it’ll be com­pro­mised at one point or an­other. Whether it’s viruses, phish­ing, mal­ware, or the ev­er­more-pop­u­lar (and ever-more-harm­ful) ran­somware, at some point or an­other, some­thing dam­ag­ing will prob­a­bly hap­pen – and that could do a great deal of dam­age if you own a busi­ness.

Many col­umn inches have been de­voted, of course, to the scope of the prob­lem, and what cy­ber­se­cu­rity firms are do­ing to com­bat it. But what hasn’t re­ceived as much cov­er­age is the fact in­sur­ance com­pa­nies are also do­ing some pretty in­no­va­tive things to adapt to the threats – and po­ten­tial threats.

Take Delta In­sur­ance. The or­gan­i­sa­tion has re­cently re­leased com­pre­hen­sive white pa­pers out­lin­ing some of the chal­lenges – and what’s be­ing done to meet them.

One of the im­por­tant as­pects of the white pa­per is new threats from over­seas to New Zealand busi­nesses. In 2016, IT ser­vices ex­ports from New Zealand saw dou­ble-digit per­cent­age growth in most ma­jor mar­kets, and our dig­i­tal econ­omy contributed more than $6.9 bil­lion in ex­port earn­ings last year.

While this is great, the white pa­per states, “in­tel­lec­tual prop­erty (IP) in­fringe­ment on patents and copy­rights are in­creas­ingly land­ing Kiwi soft­ware devel­op­ers and de­sign­ers in hot wa­ter in for­eign mar­kets, es­pe­cially Europe, Asia, and the USA — where tech giants typ­i­cally amass soft­ware patents like tac­ti­cal nukes.”

The white pa­per of­fers an ex­am­ple: that of US au­dio com­pany Bose’s claim of patent in­fringe­ment against NZ noise­can­celling tech­nol­ogy maker Phitek Sys­tems. Though the Kiwi com­pany ad­mit­ted no li­a­bil­ity, it was nev­er­the­less strong-armed into set­tling for $4.5 mil­lion plus le­gal costs. That’s a lot of money many busi­nesses in Aotearoa sim­ply don’t have.

Worse are the trolls, says Miles Valen­tine, founder of Kiwi tech com­pany Zea­com. Stung twice by patent trolls in

North Amer­ica, Zea­com was lit­i­gated for tech­nol­ogy it didn’t even pos­sess: “[But] it was go­ing to cost me US$1 mil­lion to get to court to tell them that,” says Valen­tine. “So I gave them $350,000 to go away.”

The Delta In­sur­ance white pa­per fol­lows an­other white pa­per that was re­leased ear­lier this year, which says that New Zealand, de­spite its ge­o­graph­i­cal iso­la­tion, re­mains highly vul­ner­a­ble to cy­ber­at­tacks. That white pa­per states while the na­tion has ex­panded its cy­ber re­silience ca­pa­bil­i­ties and strate­gies to deal with at­tacks, it re­mains one of the “Cy­ber Five” – along­side South Korea, Aus­tralia, Ja­pan and Sin­ga­pore – who ap­pear to be more vul­ner­a­ble to at­tacks than any other Asia-Pa­cific econ­omy.

The white pa­per also states that many New Zealand busi­nesses re­main un­der­pre­pared. Al­most one in five New Zealand small-to-medium en­ter­prises (SMEs) have been tar­geted by a cy­ber­at­tack, with an av­er­age fi­nan­cial loss of $19,000. Yet while the num­ber of Aus­tralian and New Zealand small busi­nesses who have faced a cy­ber­at­tack are vir­tu­ally iden­ti­cal (19 per­cent in Aus­tralia and 18 per­cent in New Zealand), only six per­cent of New Zealand SMEs have cy­ber in­sur­ance, com­pared with 14 per­cent of Aus­tralian SMEs.

That’s an is­sue, be­cause of this: ac­cord­ing to the white pa­per, the to­tal cost of cy­ber threats to New Zealand was es­ti­mated at $257 mil­lion in 2016, and that there are, on av­er­age, 108 cy­ber­at­tacks in New Zealand ev­ery day – a num­ber that is in­creas­ing. About 100 mil­lion cy­ber­at­tacks in New Zealand were thwarted in 2016 – a two-fold in­crease from 2015.

Ac­cord­ing to Delta co-founder Ian Pol­lard, the white pa­pers are just the lat­est re­minders of the im­por­tance of cy­ber in­sur­ance. He says that cy­ber in­sur­ance these days is a whole lot more than sim­ply re­coup­ing costs af­ter in­for­ma­tion has been dam­aged, de­stroyed or stolen.

“The risks are chang­ing quite dra­mat­i­cally daily, and more so than they ever have in the past.”

Ac­cord­ing to Pol­lard, cy­ber in­sur­ance has been a thing for about 20 years in places like the United States and Europe. How­ever, “it’s only internationally re­ally started to be­come a thing [in New Zealand] in the past five to six years.”

Pol­lard em­pha­sises that with ev­ery­one to­day be­ing on­line in some way, shape or form – and quite a lot of us spend­ing the ma­jor­ity of our time on­line, in­clud­ing stor­ing al­most all of our in­for­ma­tion – cy­ber in­sur­ance is no longer just a ne­ces­sity for large, multi­na­tional cor­po­ra­tions hold­ing data like trade se­crets.

Pol­lard of­fers proof by list­ing the great va­ri­ety of Delta’s clients. “We’ve got a panel beater based in Auck­land buy­ing cy­ber in­sur­ance, we’ve got dairies buy­ing cy­ber in­sur­ance, govern­ment in­sti­tu­tions, fi­nan­cial firms… ev­ery sec­tor should be think­ing about cy­ber in­sur­ance.”

Delta al­ready has thou­sands of clients in New Zealand – and Pol­lard says busi­ness is ex­pected to dou­ble, lit­er­ally, in the com­ing year.

But why are so many peo­ple get­ting cy­ber in­sur­ance? Pol­lard has some the­o­ries. “These risks can hap­pen to you,” he warns. “Things can go wrong in New Zealand. And most peo­ple get it (that things can go wrong) be­cause we’re so tech-savvy.”

One of the ways to be tech-savvy, says Pol­lard, is be­ing proac­tive and know­ing when to ask for help – things that, as many of us can re­late, are pretty im­por­tant in ev­ery facet of busi­ness.

He says to think of it like of­fer­ing not just fire in­sur­ance if your house burns down, but mak­ing sure your house doesn’t burn down in the first place.

But how, ex­actly, does that re­late to cy­ber in­sur­ance? Ac­cord­ing to Pol­lard, Delta of­fers pre-loss help and pro­tec­tion. To do so, it also works with part­ners in­clud­ing RedShield, Aura In­for­ma­tion Se­cu­rity, SafeS­tack and more – or­gan­i­sa­tions which are among the most in­no­va­tive on the planet when it comes to cy­ber se­cu­rity and pre­vent­ing bad things from hap­pen­ing.

What we tend to of­fer is a lot more than just an in­sur­ance prod­uct,” he says.

“We’re tak­ing a quite dif­fer­ent ap­proach. We bring quite a bit more to the ta­ble than meets the eye. Our ex­perts work with our in­sureds once they’ve taken up a pol­icy - they give cy­ber risk as­sess­ments and health checks, im­ple­ment state-of-the-art cy­ber­se­cu­rity soft­ware if needed and as­sist with poli­cies, pro­ce­dures, disaster re­cov­ery plans and busi­ness con­ti­nu­ity plans. Most of these are tried and tested. They’re just quite in­tan­gi­ble – you can’t see it, can’t taste it, can’t hold it. We or­gan­ise this be­cause as an in­surer it’s bet­ter, and cheaper, for all par­ties if we can avoid be­ing the am­bu­lance at the bot­tom of the cliff!”

As Matt Tay­lor of RedShield puts it: “If the bad guys come, you want a pri­vate army on your side.”

That army can be help­ful in com­bat­ting threats like dis­trib­uted de­nial of ser­vice (DDoS) at­tacks – which flood web­sites with sim­u­lated re­quests un­til the site crashes – which dis­pro­por­tion­ately hit IT, SaaS and cloud ser­vice providers. With 33 per­cent of global DDoS in­ci­dents af­fect­ing tech com­pa­nies, they cost busi­nesses about $40,000 per hour of out­age on av­er­age.

Pol­lard goes back to the im­por­tance of adapt­ing to a chang­ing threat land­scape – and tak­ing steps to en­sure threats don’t cause as much dam­age in the first place, not un­like lock­ing your doors to keep bur­glars out of your home or bolt­ing a hot wa­ter heater to a wall so it’s less likely to fall dur­ing an earth­quake.

“Evolv­ing threats re­quire an evolv­ing re­sponse,” he says.

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