HK Insurance Authority warns of rising cyber threat

Cyber insurance penetration in Hong Kong is half the level of Singapore as a percentage of GDP.

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Hk insurance authority warns of rising cyber threat

(Re)in Summary

• The number of cyber incidents in Hong Kong doubled between August 2023 and 12 months later.
• Phishing is the number one source of attacks from hackers in the SAR, followed by malware.
• Australia has the deepest cyber insurance market in Asia Pac, with total premiums in 2023 reaching nearly US$500m
• Hong Kong’s regulators are looking closely at cyber risk, with the IA, HKMA, and SFC, all setting out specific regulations.

The number of cyber incidents in Hong Kong has doubled in the last 12 months with the total global cost of cybercrime on course to increase nearly 27-fold between 2018 and 2017, according to Clement Cheung Wan-ching, CEO of the Hong Kong Insurance Authority (IA).

Cheung gave his warning at a conference hosted by the Hong Kong Association of Insurance Brokers last week. He cited data from BitSight and Moody’s which showed that while globally there was a slight tail-off in cyber attacks in 2022, incidents in Hong Kong have been on the rise in the last year.

Data from the Hong Kong Computer Emergency Response Team Coordination Centre showed that in August 2023 the SAR recorded 624 cyber incidents – fast forward 12 months and the number has increased to 1295.

Phishing was the number one source of attacks, accounting for 734 incidents, followed by malware (370), and botnets (153), with the remainder made up of the catch-all category of ‘others’.

The CEO said that Hong Kong companies and residents had lost more than HK$5.5bn ($700m) to cybercrimes, and that the financial services companies were in hackers crosshairs, with the sector subject to 25% of the total number of attacks.

Cheung warned that the emergence of AI was ramping up the potential threat as it makes future attacks more scalable and sophisticated.

According to data from Cheung, Australia has the broadest amount of cyber insurance coverage in Asia Pacific, with nearly $500m of premiums paid in 2023, amounting to 0.0353% of the country’s GDP.

If Australia is the regional leader than Cheung characterised Hong Kong as a ‘fast follower’ of its cyber coverage. Total premiums paid in 2023 were valued at $17m but this only amounted to 0.0047% of its GDP, roughly half Singapore’s figure (0.0081%). This figure came on a slide titled, ‘Growth Potential of Cyber Insurance’.

The CEO highlighted the three-pronged approach that Hong Kong’s regulators’ are taking to dealing with the rising cyber threat. These includes the IA’s cyber security guidelines, as well as the Hong Kong Monetary Authority’s Cybersecurity Fortification Initiative, as well as the SFC’s Guidelines for Reducing and Mitigating Hacking Risks Associated with Internet Trading

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