Study 10 Flashcards
What can happen if an organization fails to adequately secure its systems?
It could be liable for damages suffered by its customers
Customers may become victims of identity theft if cybercriminals access the organization’s data.
What are some optional cyber liability coverages?
- Regulatory defence expenses
- Punitive damages
- Arbitration expenses
- Criminal rewards for information leading to the arrest and conviction of cybercriminals
These coverages help organizations mitigate various risks associated with cyber incidents.
What is typically excluded from cyber risk insurance?
- Hard-to-quantify losses
- Reputation damage
- Lost intellectual property
- Some class action lawsuits
- Future losses, such as loss of competitiveness
Quantifying losses like reputation damage can be particularly challenging.
What does property insurance typically cover in relation to cyber risk?
- Direct damage to electronic equipment
- Lost data from certain perils
- Cost of restoring or replacing data
Coverage may depend on the technology used and the level of exposure.
What is covered under specialized policies for cyber risk?
- Loss/corruption of data
- Business interruption
- Cyber extortion
- Crisis management
- Data breach
- Identity theft
- Social media/networking liabilities
These coverages address specific financial impacts and operational disruptions caused by cyber incidents.
What factors should brokers consider when recommending cyber insurance?
- Existing security measures
- Required security improvements
- Location of cloud accounts
- Risks that can be avoided, retained, or controlled
- Personal information being stored
- Number of sensitive records accessible
- Reliance on third-party services
- Possible outcomes of undetected data breaches
These considerations help tailor cyber insurance to the client’s specific needs.
What is blockchain?
A technology platform that enables distributed ledger technology (DLT)
Transactions are permanently recorded in a way that they cannot be erased or tampered with.
What is a key feature of a block in a blockchain?
- Encrypted
- Time and date stamped
- Linked to previous blocks
Blocks show the full history of a transaction and are locked to prevent tampering.
What is a 51 percent attack in the context of blockchain?
An attack where a party controls 51 percent of the nodes, allowing them to manipulate the distributed ledger
This could enable double-spending by altering transaction records.
What is the purpose of consensus in a blockchain network?
To maintain agreement among nodes regarding the contents of the ledger
Consensus algorithms ensure the reliability and tamper-resistance of the blockchain.
What are smart contracts?
Self-executing contracts with the terms directly written into code on a distributed ledger
They automate processes like payments without human intervention.
Fill in the blank: A smart contract is executed between parties on a _______.
[distributed ledger]
What is the sharing economy?
A movement where people connect online to share goods and services within communities
What was the expected growth of the global sharing economy from 2015 to 2025?
$15 billion USD in 2015 to $335 billion USD by 2025
Name two sectors that have quickly become part of the sharing economy.
- Hospitality
- Transportation
What is Uber?
One of the most widely used ridesharing services available through an app
What types of products and services are commonly shared in the sharing economy?
- Automobile and transportation sharing
- Accommodation sharing
- Household items sharing
What reasons do many drivers choose not to own cars?
- Avoiding costs of ownership
- Living in congested urban areas
- Minimizing commuting time
- Using public transit
True or False: Personal automobile insurance generally covers commercial use like ridesharing.
False
What are the three distinct commercial activities in ridesharing?
- Accessing the rideshare app without a ride
- Going to pick up a passenger
- Carrying the passenger
What is a ridesharing endorsement?
An addition to standard insurance policy allowing drivers to carry paying passengers
What types of coverage do ridesharing endorsements provide?
- Coverage when logged into the app
- Coverage going to pick up a passenger
- Coverage while carrying a passenger
What is carsharing?
Apps that connect vehicle owners with renters for short-term vehicle rentals
How does accommodation sharing create risk exposures?
It can lead to insurance coverage gaps for both hosts and guests
What types of property damage exclusions could impact accommodation sharing coverage?
- Damage to the dwelling and contents of hosts
- Damage to the property of guests
What is Airbnb’s ‘AirCover for Hosts’?
A protection plan that includes up to US$1 million for damage to hosts’ property
Fill in the blank: The guest’s personal property is not covered under the host’s insurance policy due to the _______.
property of roomers or boarders exclusion
What liability exclusions are present in homeowners’ policies related to accommodation-sharing activities?
- Exclusion for business pursuits
- Exclusion for business use of the premises
True or False: A host may have no coverage for damages if they are injured during a rental activity.
True
What can guests be liable for regarding the host’s property?
Causing damage to the host’s property
What is excluded from coverage in the context of a host meeting a guest?
Claims for injury or property damage related to the business of hosting
This includes situations such as handing over keys or bringing in a cleaning service.
What liability does a guest have regarding the host’s property?
Guests may be liable for causing damage to the host’s property and may be personally liable for any damage beyond accidental damage covered by their policy
Personal liability policies typically exclude coverage for property in the care, custody, and control of the insured.
What concerns do municipalities have regarding Airbnb?
- Loss of revenue from tourism taxes
- Safety of hosts and guests
- Loss of affordable long-term rentals
- Abuse of rent-control laws
What is the Insurance Information Institute’s stance on renting homes via Airbnb?
They urge potential hosts to consult with their insurer about coverage before renting
This is especially important as coverage varies by insurer.
What regulations did Vancouver City Council impose regarding short-term rentals?
They monitor the impact on long-term housing, hotel tax revenue, and enforce zoning bylaws prohibiting rentals of less than a month unless part of a hotel or bed and breakfast.
What changes did San Francisco implement regarding Airbnb rentals?
Short-term rentals were allowed with regulations, including a requirement for hosts to live in the dwelling for at least nine months a year and pay a registration fee.
What fines have been imposed on Airbnb in Barcelona?
Airbnb was fined 30,000 Euros for breach of local tourism laws.
What is required for hosts in Montreal providing short-term accommodations?
- A $250 permit
- Liability insurance
- Payment of a host tax
True or False: Airbnb provides hosts with detailed information about local regulations.
False
Airbnb places the burden on hosts to determine local restrictions.
What kind of insurance policy is suggested for regular short-term rental hosts?
A business policy covering a hotel or bed and breakfast
Standard homeowners policies typically do not cover business activities.
What could lead an insurer to deny coverage for damages incurred during a short-term rental?
Failure to disclose the business of offering short-term rentals to the insurer.
What underwriting considerations might be included for short-term accommodation coverage?
- Frequency of guest stays
- Number of rooms rented
- Number of guests at one time
- Presence of the host during guest stays
- Safety and security measures
Fill in the blank: The Bartons’ insurance company may deny coverage because they did not disclose their _______.
business of offering short-term rentals.
What issues does the San Francisco Board of Supervisors debate regarding Airbnb?
- Loss of hotel tax revenue
- Zoning concerns
- Affordable housing issues
- Insurance coverage concerns
What is the maximum rental duration allowed in Amsterdam under its Airbnb-friendly law?
Two months per year.
What was the result of the Bartons’ guest’s injury during the rental?
The guest sued the Bartons for payment of medical costs.
What are some new trends impacting daily activities?
CLIMATE CHANGE, CYBER RISK, SHARING ECONOMY, and AUTONOMOUS VEHICLES.
True or False: Emerging trends only benefit the economy without any risks.
FALSE! They bring new RISKS alongside their benefits.
What major challenge do insurance companies face with emerging trends?
Pricing COVERAGE for new RISKS and determining LIABILITY.
How will new trends affect businesses?
Businesses need to maintain PROFITABILITY and GROWTH while managing new RISKS.
Who will be liable for damages in the future with these new trends?
That’s still an OPEN QUESTION! It depends on the risk and liability scenarios.
What year did the average global temperature start being warmer than the 20th-century average?
SINCE 1998, the global temperature has been consistently warmer than the 20th century average.
True or False: The increase in global temperatures has been a gradual process over the last 100 years.
FALSE! The rise has been DRAMATIC, especially in the last 50 years.
What is the main reason for the current climate change?
HUMAN ACTIVITY, such as burning fossil fuels and deforestation, is the primary cause.
What scientific methods are used to measure global temperature?
Weather stations, WEATHER BALLOONS, ocean buoys, satellites, and research organizations all track global temperature data.
Which has a stronger effect on climate change: natural causes or human activities?
HUMAN ACTIVITIES, especially the release of GREENHOUSE GASES, are the dominant cause of climate change.
What’s a major contributor to the greenhouse effect?
CARBON DIOXIDE from burning fossil fuels is a major contributor to the greenhouse effect.
What is the effect of human-induced climate change?
It can lead to EXTREME TEMPERATURES, changes in precipitation, and an increase in extreme weather events.
In Canada, which climate change effects are most pronounced?
Rising temperatures, melting ARCTIC SEA ICE, and increasing storm damage are all significant in Canada.
What threat does melting permafrost pose?
Melting PERMAFROST can damage infrastructure and release METHANE, which worsens global warming.
True or False: Climate change could lead to fewer forest fires in Canada.
FALSE! Hotter summers will lead to MORE SEVERE forest fires.
What scientific fields contribute to the current understanding of climate change?
ATMOSPHERIC SCIENCE, EARTH SCIENCE, BIOLOGICAL SCIENCE, and MATH/STATS.
What percentage of scientific papers support the idea that human activity is causing climate change?
97.2% of authors endorse human activity as the cause.
True or False: Legal actions for climate change consequences have been mostly limited to Canada.
FALSE! Most legal actions have taken place in the UNITED STATES and other countries.
What are some common allegations in legal actions against private companies regarding climate change?
Impact of climate change, FAILURE TO ADAPT INFRASTRUCTURE, and potential DISCLOSURE issues.
What is ‘attribution science’?
It determines if CLIMATE CHANGE contributed to specific extreme WEATHER EVENTS.
Who is often the target of legal actions for climate change impacts?
COAL, OIL, GAS producers, and other energy companies (CARBON MAJORS).
What might legal actions against governments in Canada target?
Failure to account for CLIMATE RISKS in essential public infrastructure.
True or False: The Canadian courts have frequently ruled that governments are liable for failing to address climate risks.
FALSE! There has been LITTLE LITIGATION in Canada regarding government responsibility for climate change.
What responsibility do insurers have in the context of climate change?
They face potential LIABILITY RISKS through coverage and may be challenged on the consequences of PAST EMISSIONS.
How might insurers handle claims related to local governments failing to adapt infrastructure for climate risks?
They could take LEGAL ACTION against local governments to recover costs.
What is one possible consequence for insurers related to the growing focus on climate-related risks?
Increased PROFESSIONAL LIABILITY risks, particularly regarding DISCLOSURE of climate risks.
What sector might be held responsible for failing to anticipate severe weather risks in their infrastructure?
LOCAL GOVERNMENTS could be found LIABLE for failing to adapt infrastructure to climate risks.
What historical industries’ liability costs have insurers learned from in relation to climate change?
TOBACCO and ASBESTOS industries’ liability costs.
What is one example of how Canadian research has linked climate change to severe weather events?
The FORT McMURRAY WILDFIRE was found to have been influenced by climate change.
True or False: Insurers may be challenged in court when they refuse to defend policyholders involved in climate-related claims.
TRUE! Insurers may face challenges when refusing to defend against climate-related liability claims.
What legal issue may arise with energy producers concerning climate change?
ENERGY PRODUCERS may face legal actions as major contributors to CLIMATE CHANGE, despite not being legally responsible for the impacts.
How has the expectation of insurance disclosure evolved in response to climate risks?
There is an increased demand for disclosure of PHYSICAL and TRANSITIONAL climate risks, with the TASK FORCE on CLIMATE-RELATED FINANCIAL DISCLOSURE as the emerging standard.
What is the term for legal actions that may hold governments liable for failure to reduce emissions?
CLIMATE LITIGATION.
Which part of Canadian governments owns and manages most of the public infrastructure?
PROVINCIAL, TERRITORIAL, and LOCAL GOVERNMENTS manage nearly 98% of public infrastructure in Canada.
How does the insurance industry plan to manage the risk of liability from major climate events?
By ensuring LIABILITY for past emissions does not TRANSFER to the INSURANCE INDUSTRY.
What is the primary definition of CYBER RISK?
CYBER RISK is the potential for financial loss, business disruption, or reputational damage due to a failure of IT systems.
What are the three main categories of cyber risk?
DELIBERATE breaches (e.g., ransomware), UNINTENTIONAL breaches (e.g., lost laptop), and OPERATIONAL IT risks (e.g., weak passwords).
What is one example of a DELIBERATE cyber attack?
RANSOMWARE attacks, where businesses are locked out of their systems until a ransom is paid.
What is a potential INDIRECT financial loss caused by a cyber attack?
LOSS OF COMPETITIVENESS if intellectual property like trade secrets is stolen.
What should a POST-LOSS PLAN include after a cyber attack?
Steps to secure the system, identify the breach, and comply with privacy legislation and insurer requirements.
What are the two key areas of CYBER RISK EXPOSURES for organizations?
BEHAVIOUR MANAGEMENT and SYSTEMS & TECHNOLOGY MANAGEMENT.
How did COVID-19 increase the risk of cybercrime?
Remote working made people more vulnerable to phishing and cyber attacks due to unfamiliar work environments.
What is an example of BEHAVIOUR MANAGEMENT to reduce cyber risk?
Employees should ask, ‘Does it make sense?’, ‘Does it follow an established process?’, and ‘Was I expecting it?’ before taking action.
What type of attack involves overwhelming a network with traffic to make it unavailable?
DENIAL OF SERVICE ATTACK.
What is typically covered under CYBER RISK INSURANCE?
THIRD-PARTY LIABILITY, CYBER CRIME, EXTRA EXPENSE, and BUSINESS INTERRUPTION losses from cyberattacks or data breaches.
