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Internet of things pushes insurers


Love it or hate it, the biggest shopping season of the year is about to start, and it raises some not-so-tangential insurance concerns.

As many shoppers know, Cyber Monday is at least as, if not more, popular than Black Friday nowadays and will likely grow in importance as the day to snag deals in the runup to the holidays.

Rather than face the stampede of rival bargain-hunters in physical stores the day after Thanksgiving, many people are content to wait out the weekend and click or tap their way through online stores in the comfort of their own homes or offices three days later.

And the goods they are piling up in their virtual shopping baskets are increasingly likely to be as connected as the computers and smartphones they are using to rack up their electronic credit card bills. Consumer goods ranging from Barbie dolls to refrigerators can connect to the internet to make life more entertaining and more convenient.

Far beyond the home, industrial control systems and electric grids are even more dependent on internet connections, which of course makes them vulnerable to attack.

The pervasive — or maybe invasive — reach of the internet in our lives is exposing organizations and individuals to risks that may or may not be covered by insurance.

Insurers have taken steps over the past several years to exclude certain cyber-related exposures from standard property/casualty policies as they seek to avoid risks they had not priced into the policies and carve out a separate line of business in the form of cyber liability insurance.

The problem is that the so-called internet of things has rapidly evolved over just the past 18 months, and exclusions written a couple of years ago aimed at excluding data breach response costs could limit coverage for bodily injuries and property damage resulting from hacked everyday devices.

The introduction of driverless vehicles will raise more concerns. A cyber exclusion for physical damage or third-party liability for a car driven by a computer is as absurd as excluding death as a claims trigger for a life insurance policy.

Fortunately, insurers are developing coverages that integrate wider cyber protections, but they need to move quickly and get ahead of the buying public.