March 21, 2019 by Greg Meckbach
Insurance Bureau of Canada officials are hoping a $145-million commitment by the federal government towards cyber security will help the industry better understand how much a cyber incident could cost.
In the 2019-20 budget document tabled Tuesday, federal Finance Minister Bill Morneau proposed to spend $144.9 million over five years critical cyber systems, including those in the finance, telecommunications, energy and transport sectors.
The industry needs to get a better understanding of how much money could be lost as a result of a cyber security disaster in Canada, suggested Craig Stewart, IBC’s vice president of federal affairs, in an interview Wednesday.
“It is difficult for insurers to underwrite a risk that is poorly understood and difficult for government to create a policy and legislative framework when they don’t understand the risks,” he said. Both government industry have an interest in better defining the problem and the $144.9 million “will go in part to that effort,” Stewart predicted.
The government proposes to start spending the $144.9 in the fiscal year beginning April 1, 2019. At least some of that money would go to the Canadian Centre for Cyber Security, which the federal government launched Oct. 1. The Centre for Cyber Security – which is part of the federal Communications Security Establishment – aims to provide guidance to organizations operating critical infrastructure on how to better prevent and address cyber attacks.
In a separate report released Jan. 29 by Lloyd’s, the Cyber Risk Management (CyRiM) project modelled the loss from a hypothetical ransomware attack affecting multiple corporate victims.
Global economic losses were estimated at US$85 billion to US$193 billion, CyRIM said in Bashe attack: Global infection by contagious malware.
In Canada, cyber incidents against critical infrastructure – such as telecommunications and energy – have the potential to harm national security and public safety, the government said Tuesday in its budget document.
Also in the budget, Morneau said Ottawa plans to invest $48 million over four years, starting in 2020-21, for infrastructure projects intended to protect indigenous communities from climate-related hazards.
This is good news for commercial insurers writing risks for First Nations bands, Stewart suggested, because most properties on reserves are owned by band councils who buy commercial insurance.
“This would hopefully improve the loss ratio for insurers and makes some reserves more insurable.”