Insurers refuse utilities cyber cover

Insurers are refusing to cover UK energy companies because their defences against computer hacking are inadequate according to a report by Lloyd’s of London.

According to Lloyd’s, demand from energy companies for indemnity against cyber attack had surged recently with companies who had previous rejected data protection insurance now seeking cover. But insurers have been rejecting what would be multi-million-pound policies because the energy firms’ IT security was in a parlous state.

Underwriter at a Lloyd’s of London syndicate, Laila Khudari, told reporters that requests from energy groups for cyber attack insurance had been growing but the insurer was unwilling to take the risk after assessing the companies’ security systems.

“They are all worried about their reliance on computer systems and how they can offset that with insurance,” Khudari said. “We would not want insurance to be a substitute for security,” she added.

The reason for the surge in interest in cyber security cover is thought to have been fire by the growing profile of hacking crime in the media and recent instances of confirmed cyber attacks on infrastructure. Leading security company Atkins warned recently that information on the internet, including data from blogs and social networks can be used to mount a cyber-attack on energy grids.

Chief of data security firm ViaSat UK Chris McIntosh, was reported last week in the IT press saying: “Energy firms seeking insurance against cyber-attacks shows the vulnerability of our critical infrastructure is finally hitting home.” He said insurance was only “a plaster over these underlying weaknesses,” and warned energy companies to: “Act now to protect the network and address the unique nature of interconnected, real-time control systems.

“Unless energy companies demonstrate they are taking the necessary precautions, insurers will keep them at arm’s length; public trust will fall; and the resilience of the country’s critical national infrastructure will inevitably suffer as a result,” McIntosh said.