Insurance is an essential yet costly expense that trucking companies must manage to ensure their vehicles remain operational. Technologies such as dash cams, Advanced Driver Assistance Systems (ADAS), and telematics are being leveraged by carriers to help reduce these costs, as more insurance providers utilize data from these tools for policy underwriting.
However, the introduction of these technologies also presents new challenges, leading to additional costs in the realm of cyber insurance.
This topic garnered significant attention at the recent National Motor Freight Traffic Association’s annual conference in Cleveland, Ohio, where discussions highlighted the growing focus on cyber insurance within the trucking sector.
Steve Hankel, IT vice president at Johanson Transportation, mentioned that he regularly deletes numerous emails seeking to trigger contract agreements with his firm, recognizing them as phishing attempts aimed at infiltrating his company’s sensitive data. As trucking firms integrate technologies from third-party vendors, malicious actors have more avenues for attacks, extending beyond straightforward email phishing.
Carrie Yang, senior vice president for cyber practices at insurance broker Marsh, stated that vulnerabilities arising from third-party vendor access are of major concern to insurance underwriters. This vulnerability is referred to as a “single point of failure,” where an attack on one vendor could adversely affect the insurance policies of countless other companies, resulting in significant financial losses.
Yang also reported a rise in cyber attack incidents. She anticipates that by 2025, cyber insurance rates will experience a slight increase. “Currently, the market in 2024 is relatively favorable for buyers, with decreasing rates amidst rising claims activity,” she explained. “Insurance providers tend to react to claims payouts over time, and once they start incurring losses, they are likely to raise rates.”
Advantages and Disadvantages of Cyber Insurance
Yang noted that one of the primary deterrents for carriers in obtaining cyber insurance is the expense and time required to complete the extensive and detailed cyber insurance questionnaire. Yet, the financial repercussions of a cyberattack could surpass the cost of the insurance itself, with potential losses threatening the existence of the company.
Yang lists five key reasons why carriers should consider cyber insurance, starting with its fundamental purpose of providing financial protection against unforeseen incidents or losses. It’s a way to manage risk and includes free risk assessments that provide feedback regarding vulnerabilities in their cybersecurity strategies. Additionally, companies gain access to a range of resources, such as pre-qualified incident response teams and forensic investigation services. Finally, having cyber insurance may be a prerequisite for securing contracts with clients. “Many of your customers will require you to have cyber insurance in place to do business with you,” she remarked.
Insurance Coverage Limitations
Ben Gardiner, senior cybersecurity research engineer at NMFTA, highlighted that while cyber insurance can aid in recovering losses, it does not guarantee that a carrier can continue operations while waiting for claim payments. Furthermore, it does not extend coverage to physical attacks on tangible assets like trucks and trailers, a growing concern in the industry. Gardiner fears that attackers, frustrated by ineffective PC-based ransomware, may shift tactics to attacking the physical capabilities of trucks.
Yang identified a gap in coverage as the chances of cyber events affecting the physical realm become increasingly plausible. “Cyber insurance usually covers intangible assets, primarily data, and does not cover physical damages,” she stated. “If policies were developed to address this gap, they would likely come at a high cost.”
Angel Coker Jones is a senior editor at Commercial Carrier Journal, focusing on technology, safety, and business sectors. Outside of work, she enjoys outdoor activities like hiking and kayaking, horse riding, foraging for medicinal plants, and taking naps. She’s also passionate about exploring new places to sample local food, beer, and wine. You can reach her at [email protected].
