We recently took a look at concerns [1] with information gathered by our “smart vehicles.” Recent reports indicate privacy concerns should not be limited to the technology in the vehicle in your driveway. For example, we are now being warned [2] that everything from smart teapots to thermostats store valuable data and provide access to your home and, therefore, may be targets for hackers.
Appliances that can be connected to the internet are making our homes “smarter.” Once connected to the internet, these appliances can be useful by allowing homeowners remote access and providing data concerning repairs and parts directly to the manufacturer. Of course, this access can create another route for hackers to access your home. Therefore, in addition to downloading security patches for our computers and smart phones, experts warn [3] that “Honey, did you take out the trash?” may soon be accompanied in more 21st-century homes by: “Honey, did you download the security patch for the fridge?”
Outside these various privacy and security concerns, smart appliances also have implications that insurers should consider. Commentators are just starting to discuss the potential for “cyber breach property damage [4]” claims. Two recent examples of property damage caused by cyber attacks include the following: In 2008, hackers shut down alarms in a Turkish oil pipeline which resulted in a massive explosion. And, hackers accessed the control panel of a blast furnace for a German factory which caused substantial damage to the factory. Of course, while gaining access to a homeowners coffee pot may not result in damage equivalent to that seen in the Turkish oil pipeline or the German factory, it can have a devastating impact on a person’s household.
Casualty insurers may consider working on the development of this “smart” household technology in the same manner health insurers worked with Apple on its health monitoring devices. Casualty insurers may also increase accuracy in assessing risk based on information gathered through these devices. Further, once a claim is made, insurers may be able to access data from these appliances to gain a better understanding of the source of the damage. Suffice it say, this technology is going to have an immediate impact on voluntary and involuntary access to our homes and the type of property coverage insurers may need to offer.