Ben Davis, Insurance Lead of Emerging Technologies at Digital Risks
eSports – specific insurance risks:
The video games industry will be valued at $305bn by 2025 according to GlobalData. eSports, the online gaming element of this sector, will be worth $1.8bn by 2022 alone.
Traditional insurance players however have, as of yet, failed to take the eSports industry seriously and are less likely to do so in the near future. They’ll also likely struggle to adapt quickly enough to be able to protect against the emerging risks of a new sector so quickly.
Insurtechs however, that are more agile, and can better relate to the eSports audience, due to regularly engaging in the online channel, will be well placed to protect players, businesses and manufacturers in this industry.
2020 will be a tipping point for the industry as awareness of the sector, and larger investment, continues to flood in. And as the sector continues to grow and mature, there are an increasing number of risks which stakeholders will need to insure themselves against.
The players: eSports players are effectively employees of the gaming company that sponsors them. However, unlike the ‘traditional’ employee, they also often live, travel and work together 24/7 in ‘team houses’. They also require greater protection over their physical body as this is what they use to play games. If one or more players gets sick or injured pre-tournament, sponsors could be seriously out of pocket. Cover of property and physical well-being from damage is therefore crucial.
The team: eSports teams act as the face of their business. Their merchandise and in-game skins are an extension of the brand. Protecting intellectual property is therefore crucial to ensure their ’identity’ both in the virtual and real world can’t be ripped off.
The Tech: As gaming technology such as wearables and headsets become increasingly commonplace, manufacturers will need the right cover in the case of malfunctions. Product recall as well as cover for the products themselves are an exposure that will continue to grow as esports popularity continues to rise. The eSports teams themselves, affiliated with this tech, will also need to be insured if they put their name on a product which comes with faults that leads to damage or injury.
The biggest risks of 2020:
- Natural Disasters – A bold prediction
If there’s one emerging risk that will dominate 2020, it will be the development of natural disasters and the consequential damage they impose on livelihoods across the globe. Most people think that the physical and virtual worlds are separate, but in reality the virtual world is very much affected by the natural disasters of the physical world. Physical damage to technology firms can be a trigger for a cyber-based attack as their defences and resources may be compromised dealing with the physical emergency.
Calculating insurance for businesses against climate damage has largely been built on historical data. But we’re entering a new era of global heating and climate change; with extreme weather events leading to mass damage to businesses worldwide.
Historically the large insurance players have made their money through protecting property, however as climate change increases, and disasters become more commonplace, this will become an increasingly complicated (and loss-making) sector.
2020 could be the year in which the larger insurance players look to ‘balance the books’ to better protect themselves against more claims in this sector. This could mean they could either look to provide new products that are uncorrelated with property losses or reduce their exposure in this sector.
Businesses that do not respond quickly enough to the ‘greenification’ of everything will also be hit by social pressure to change potentially harmful business practices or investment. We are already seeing insurers pull out of businesses that are deemed to be harmful to the planet. 2020 will be important for companies to take a strong stand on climate change and show the world how they’re changing to address it or risk being ostracized for failing to act.
- Cybersecurity
2019 has been a bad year for cybercrime. Security specialists Symantec revealed earlier in the year that over 4 billion records had been breached, with nearly 4,000 separate incidents announced. 2020 is expected to see a continuation, or even an increase in the level of attacks, with Cybercrime Magazine predicting that by 2021 attacks will cost $6 trillion annually.
One of the main issues is that as the fraudster/hacker gets smarter, there are simply not enough trained cyber security professionals to protect every business. In a world of open APIs and shareable data, this means that one weak link in the chain can bring down an entire host of businesses.
Some of the big trends of 2020 will include an increase in ransomware attacks, with businesses happy to pay out rather than fight their way through. As well as the dominance of the ‘Deep Fake’, where scammers can create fake videos purporting to show high level members of staff requesting junior colleagues into giving up financial information/valuable documents.
Insurtechs like Digital Risks are well placed to provide cover against these emerging cyber risks, if there is evidence of clear social engineering.
- A 5G powered IoT
With 5G infrastructure projects well underway, 2020 is expected to be the year in which the technology becomes commercially viable. This greater level of connectivity means that IoT can meet its true potential, with a host of interconnected devices helping to power our cities and advance our day to day lives.
With this however comes a host of emerging risks and security concerns. Connected devices are a paradise for hackers who can access weaker technologies, such as a thermostat or smart-fridge to infect a wider network. We’re already seeing examples where devices such as printers have been hacked to siphon off the printer’s memory to access print jobs containing sensitive files, such as contracts, corporate data or patient information.
The IoT enables botnets which are comprised of thousands or millions of infected internet-connected devices to be used to deny access to a victim’s website. With the amount of IoT devices coming online, this means that botnets could become even more powerful and commonplace. For the insurance industry, it is important to protect our clients from denial of service attacks formed from botnets, but also protect our customer’s devices if they are used in a botnet. Digital Risks insures both.
Businesses will need to be sure that they have comprehensive cover that means their entire network is protected, and that any device installed in their network is verified beforehand. This can be as simple as remembering to change the manufacturer’s default password already installed on the device. Individuals looking to take devices into shared workspaces/offices will also need cover, in case it’s their device which starts a widespread data breach.
More about Digital Risks:
Digital Risks is an insurance provider for the digital age, with pay-monthly subscription cover, proprietary technology and customer experience that reflects the fast-changing needs of small and medium-sized businesses.
With an understanding of the evolving risks and threats facing SMEs, and partnerships with the UK’s best underwriters, Digital Risks uses cutting-edge technology and leverages multiple data points to deliver a personalised experience giving customers the exact protection they need, and the service they deserve.
Digital Risks was founded in 2015 and launched in late 2016 by two friends; Cameron Shearer, CEO, an accomplished marketer, entrepreneur and tech expert, and Ben Rose, chief underwriting officer and all-round insurance specialist. Since then, Digital Risks has been on a mission to reinvent the business insurance industry for the better, creating a competitive, flexible and trusted safety net enabling SME leaders and their business to thrive.
