Affirmative cyber policies vital for maritime sector

"Nation states are not claiming public responsibility as it would result in further political tensions". Rehan Hussain, deputy manager cyber at Allianz.

The world’s growing reliance on technology and interconnectivity has made business increasingly vulnerable to cyber attacks. The maritime industry is no exception, says Rehan Hussain, deputy manager cyber at Allianz, as cyber risk poses a threat to all areas of shipping from shore-based offices, targeted by hackers, to the disruption of supply chains that support world trade.

As cyber-attacks evolve, significant protection gaps are being uncovered, emphasising the need for standalone cyber insurance coverage in the shipping industry.

There are fears that attackers may target specific cyber protection gaps, although Hussain notes that in order to know where businesses lack coverage, hackers would require a high degree of sophistication.

In October 2018, Austal – an Australian ferry and defence shipbuilder – was hit by a cyber extortion attack that breached the company’s data systems. While the attackers were believed to be Iranian hackers, the incident highlighted the difficulty in attributing alleged nation-state cyber-attacks.

“It is often difficult to pin-point the nation state or responsible party, as no one is directly claiming responsibility for these events. Assumptions may be made on where attacks originate but nation states are not claiming public responsibility as it would result in further political tensions,” says Hussain.

He adds that more intangible losses can be seen in the form of reputational issues and loss of trust in a company, which in turn can result in financial losses, alongside possible regulatory fines and litigation from data breaches.

“Typically, hull policies would exclude coverage against cyber-attack or any loss arising from a malicious act involving the use of a computer system,” says Hussain. “In general, marine as well as general liability and property policies expressly exclude cyber when a cyber incident causes purely financial losses, therefore it’s important for shippers, like other businesses, to purchase a standalone cyber policy for these types of risks.”

Figures from the International Maritime Organisation (IMO), show that marine shipping is responsible for  enabling more than 90 percent of world trade. Whether an attack is in the form of GPS spoofing to alter a vessels course or through extortion, a cyber-attack on shipping can have a substantial impact on supply chains and world trade. Hussain stressed that businesses may also face liabilities if they cannot deliver their products in time or if they lose important customer information.

Looking to the future, Hussain believes smart cities may pose wider cyber exposure, though he claims insurance will inevitably evolve in unison.

More generally, Hussain noted the increased pricing pressure cyber cover is facing. “Cyber risk capacity in the market is being consolidated leading to less availability, which in turn can lead to increased costs for insurance premiums. Cyber has been in a soft market for several years and we are now beginning to see a hardening with rate increases,” he concluded.