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Cyber
Cyber security in our personal digital lives
Cyber security in our personal digital lives
© [M] Munich Re [P1] Marco Bottigelli / Getty Images [P2] luza studios / Getty Images [P3] luza studios / Getty Images

Personal cyber insurance makes life safer and more carefree. Yet despite the continued growth in cyber-crime only a very few people have so far addressed their own personal risk. Online fraud, identity theft, malware and fraudulent financial transactions can cause major losses with long-term consequences for private individuals and their families. Following, we will take a look at demand, coverage options and the advantages of personal cyber insurance.

On the way to Homo digitalis

With just a few clicks online, the weekly shopping is done, the next holiday is booked, or a bank transfer is made. The term “Homo digitalis” refers to the modern digital individual and reflects our increasing dependence on digital technologies in our daily lives. It ranges from writing emails  and using social media channels to streaming platforms and online shops. We also pursue our hobbies, educate ourselves, and earn money online. According to Forbes magazine, the e-commerce market will generate a total of US$ 6.3 trillion by the end of 2023. With growing digital dependencies and an ever-growing number of internet users, digital risk is on the rise.
According to the research company GWI, internet users aged 16 to 64 years spend an average of 6 hours and 37 minutes a day online – which is almost two whole days a week. They mainly go online via their mobile phones (92.3%) – followed by laptops and desktops (65.6%) – to research information (57.8%), stay in touch with family and friends (53.7%) and keep up to date with news and events (50.9%). With the rise of AI-driven applications and services, such as Chat GPT or virtual reality, the digital world will become an even more attractive place for users of all generations.

Identifying cyber risks and preventing online fraud

Anyone wanting to enjoy the advantages of the internet in a more carefree way in their personal life should also be aware of its downsides, such as cyber-crime. Why are my private photos suddenly publicly visible on various platforms? Why am I receiving bills for electrical appliances I never bought? And why has the coat I ordered still never been delivered, even though the amount was debited to my credit card quite some time ago? According to the market and consumer data provider Statista, e-commerce losses due to online payment fraud amounted to US$ 41 billion globally in 2022. In 2023, almost half of all sales transactions will be made on mobile phones and online. Cyber criminals are also taking advantage of this development, and therefore, economic losses are also expected to increase.
Martin Kreuzer
Many individuals continue to underestimate the cyber threats that affect them and their families directly. The risk of cybercrime targeting private individuals is more imminent than many realize. While cyber insurance and related services cannot entirely eliminate these risks, they can provide an additional level of reassurance to individuals.
Martin Kreuzer
Senior Risk Manager Cyber Risks
Munich Re

From the criminals point of view the cyber-attack business is not confined to targeting companies; Private individuals are increasingly being attacked, sometimes with severe consequences.. Therefore, the following question arises: How can we deal with cyber risks in our personal lives?

According to the Munich Re Global Cyber Risk and Insurance Survey 2022, only 10% of the more than 7,000 respondents from 14 countries said that they weren’t concerned at all about their digital security, whereas 55% of those surveyed were concerned or even extremely concerned.

This figure is understandable. According to the Munich Re Global Cyber Risk and Insurance Survey, more than half of all respondents had already fallen victim to cyber criminals. 
Victim to cyber criminals
If we examine the list of cyber-attacks on private individuals on a country-by-country basis, the BRICS countries especially stand out: 65–77% of the respondents from China, India, South Africa and Brazil have already had to deal with cyber-attacks. For respondents from European countries the average was 50%. The outlier with the lowest number of victims was Japan – only 30% of participants said they had personally experienced a cyber incident.  
However, interestingly, 97% of the Japanese respondents claimed that protection against personal cyber-attacks was inadequate and could be improved. Awareness among the respondents from European countries was at nearly the same level (90–93%). As the figures show, people are increasingly aware of the potential risks. Yet despite this finding, personal cyber security has barely improved in the past year. 89% of the respondents felt they weren’t optimally protected. In addition to basic cyber risk awareness, adequate protection requires appropriate preventive measures, as well as financial protection and expert services should a cyber incident occur.

Averting cyber-attacks and protecting against losses

In our private lives it takes more than a virus scanner to protect against cyber risks. Insurance is part of the solution. However, this should not be confined solely to financial losses but, like in the commercial sector, should be approached holistically: In addition to a financial coverage full protection should also include appropriate defensive measures (cyber resilience), first-aid measures, and post-incident services – for example, help with data reconstruction or legal support.

To prevent anything happening in the first place, 86% favour pre-incident services.

The key components of protection against cyber-attacks include appropriate anti-virus/anti-malware programs, a firewall, regular software and system updates, strong passwords, multi-factor authentication, secure network configurations, safe browsing behaviour, proper handling of emails, data back-ups and data encryption systems. Most of the respondents (86%) of our Global Survey expect personal cyber insurance to include pre-incident services such as back-ups of sensitive data (56%), firewalls (55%) and anti-malware tools (55%). 

84% of those surveyed felt that personal cyber insurance should include post-incident services.

However, despite all care and precaution, with increasing professionalisation of cyber criminals and growing complexity for individual users, it has become virtually impossible to completely rule out a successful cyber-attack. Therefore, appropriate support and after-care measures have become all the more important. 

While only 16% of the respondents claimed that they did not need post-incident services, 60% would require data recovery services, 53% would value support via a 24-hour hotline, and 48% for legal advice. These three services were seen as most important,  followed by advice in the case of extortion, aid with restoring the reputation, and psychological counselling.

Flexible cyber insurance solutions for private individuals

Personal cyber insurance solutions are available on the market and, according to Munich Re’s survey, have developed positively over the year. The number of people who were offered personal cyber insurance increased from 13% to 17%. The number of people taking out cyber insurance for themselves and their family (6% compared to  4% in 2021) was also a positive development. Furthermore, an additional 34% of those surveyed were planning to take out such insurance. There are a variety of insurance offerings, ranging from special individual policies to combined insurance products and services. These can be e.g. credit cards, telecommunications contracts or home insurance policies.

Cyber insurance is a good step towards ensuring the secure enjoyment of internet usage.

Carsten Topsch
Anyone who owns a laptop, tablet, smartphone or smart speaker, who uses social media or buys and sells things online is well advised to take out a personal cyber insurance policy. Personal cyber insurance can help, for example, in dealing with online fraud, cyber extortion, identity theft and data loss, by compensating for financial losses and providing expert support.
Carsten Topsch
Head of Cyber Reinsurance Underwriting
Central, Southern and Eastern Europe

Possible coverage modules in the area of personal cyber insurance:

Munich Re has established a leading global position in the cyber insurance market through know-how, modelling, expert networks and client focus. We support insureds in building the resilience and responsiveness necessary to combat cyber risks.
Therefore we are actively initiating exchange and collaboration with our clients and partners to promote a sustainable, transparent and demand-oriented cyber insurance market for business and also for private individuals with their families.

About the survey
The survey was conducted in December 2021 on behalf of Munich Re by the global market research company Statista and evaluated in January and February 2022 with internal experts from Munich Re. Further information on the countries and the participants surveyed can be found in the PDF file: Munich Re Global Cyber Risk and Insurance Survey 2022
Experts
Martin Kreuzer
Martin Kreuzer
Senior Risk Manager Cyber Risks
Axel von dem Knesebeck
Axel von dem Knesebeck
Corporate Underwriting Cyber

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