Welcome to the March edition of REG Reviews. This month we look at the increase in cyber-attacks and demand for cyber insurance. This edition also includes Gabriel Webber’s thoughts as the race for ESG regulation begins. Read these articles and many more, along with our usual updates from REG and the REG Tech sector.
Major Social Media Platforms Ban Russian State Media In Europe
Social media giants; YouTube, Facebook and TikTok made the move to ban Russian state media outlets in Europe, blocking Moscow’s biggest megaphone for influencing public opinion about the war in Ukraine in a critical region on its borders.
The move by the social media giants came after mounting pressure from the European Commission, the Ukrainian Government, U.S. politicians and their own employees. Boycotts from Russia have also consisted of Apples halt of all product sales within the country. The iPhone producer said Apple was “deeply concerned” about the Russian invasion and stands with those “suffering as a result of the violence”. Apple Pay and Apple Maps are among some of the services that will no longer be available in Russia.
Cyber-Attack on Aon
Sadly, given the current political situation involving Russia and Ukraine, cyber experts are anticipating heightened cyber activity and hacks. Insurers, reinsurers, and intermediaries hold a vast amount of sensitive data, and as such, are prone to cyber-attacks and ransomware incidents.
At the end of February, Aon, the British-American provider of insurance and pension administration, was hit by a cyber-attack. Aon instantly launched an investigation, and worked with third-party advisors, incident response professionals, and counsel.
So far, fortunately, Aon says that the cyber-attack has not had a significant impact on its operations. The broker adds that although it’s still in the early stages of assessing the breach, based on current information, Aon “does not expect the incident to have a material impact on its business, operations or financial condition.”
That said, no organisation can ever be truly ready for a cyber-attack, but preparation in the event of one can make a big difference to the outcome and consequences. If a cyber-attack occurs, a clear response strategy can be the difference between make or break for a company.
REG Hosts First Networking Event Of 2022
Following the success of our Networking Event in December, on March the 10th we saw our second Networking Event since Covid restrictions began. It was lovely to see some familiar faces and new ones in our Lime Street office. Thank you to those who attended, from the positive responses received we are sure you had a great time!
To make sure you don’t miss out, please contact email@example.com if you would like to receive details of future events.
FCA Confirms Scrapping Bonuses
The FCA has confirmed that discretionary cash bonuses will end for all staff in 2023, with the final bonuses to be paid this April. During February just gone, union Unite accused FCA’s CEO, Nikhil Rathi, of “waging war” on staff as it revealed that 87% of members at the regulator supported strike action against the proposals.
However, a new employment offer is on the way, which aims to reward strong, consistent performance, aid career development and close pay gaps. Around 800 of the FCA’s lowest paid workers will receive an average salary increase of £4,310 to the minimum of a new pay benchmark.
This coupled with other salary hikes and performance related pay, will see the overall increase reach an average of around £5,500. Employees will now also receive higher pension contributions and flexible benefits, plus those who meet their performance targets, approximately 85% of workers, will receive a salary increase of at least five percent this year and four percent in 2023.
“We believe we have developed a fair, competitive, and sustainable offer that will help us achieve our regulatory objectives, as well as diversity goals, that supports the lowest paid and the strongest performers, with most colleagues receiving a minimum salary increase of over nine percent over the next two years and an average of over 12% over that period” said Nikhil Rathi, Chief Executive Officer of the FCA.
Cyber Insurance Prices Soar
As cyber-attacks and losses have increased, so has the demand for cyber insurance. However, this also means premiums are reflecting the harsh new reality. Businesses across the world are now likely to face an even higher increase in the cost of insurance against cyber-attacks. The expense of cyber insurance has risen steeply over the past year alone. According to Marsh, the price of cover in the US grew by 130% in the fourth quarter of 2021, while in the UK it grew by 92%. This has put even more pressure on companies who were already feeling the strain of inflation costs in other parts of their business.
With cyber risk growing in perception and reality, strong momentum is building across the cyber insurance market. No other business line has such a fluid risk landscape on one hand, but such growth potential on the other. These tensions are currently evident in the market, with demand for dedicated cyber cover increasing at a time when market supply is diminishing in size.
REG’s Reassurance Around Sanctions
Given the current political situation, REG would like to take a moment to reassure our customers and partners that we have a fantastic data team on hand who guarantee daily sanction checks and updates for both firms and individuals. We understand the importance of these checks to your business and the potential impact they could have and want to reassure our customers that they can be confident in the processes REG have in place.
The sanctions list which we check against are the following;
- HM Treasury Consolidated List
- United Nations Sanctions Orders
- European Union Sanctions Orders
- US Treasury OFAC
- Canadian OFSI
- Australian DFAT
How Can Insurance Find Its Place In The Metaverse?
Everything we are able to do in the physical world can be replicated in the virtual world. From eating to weddings, from shopping to work meetings. That said, why shouldn’t we also be able to sell, purchase, trade, invest and insure virtually as well?
Big names such as JP Morgan have taken their first steps in indulging in this concept, being the first bank to open within the Decentraland Metaverse creating an estimated $1 trillion opportunity for the company. As more users start to indulge in virtual assets, the sense of ownership over these virtual objects will create demand for metaverse insurance. Seemingly, this all seems quite straight forward, however, only the companies with an already established digital means will succeed in this transition. Thus far it is estimated that only 15% of the world’s largest insurers are digitalised, creating a competitive entry into the metaverse market.
Funeral Plans Sector Set To Be Regulated
In November 2021, the FCA announced that it would start regulating the pre-paid funeral plans sector from 29th July 2022. This regulation ensures that the products provided meet consumer needs and offer fair value.
This will mean that all regulations will apply to both providers and intermediaries. Firms that fall into either category will need to apply for the FCA’s direct authorisation or become an appointed representative (AR) of a Principal Firm. After reading this news, if you are thinking of becoming an AR, we are aware that there are certain challenges and obligations you will face. Our whitepaper “Principal firms under the spotlight” looks at different types of Appointed Representatives and the responsibilities firms have when acted as a principal.
Firms that apply for authorisation after February 2022 are unlikely to be authorised by the time regulations come into force. Without authorisation, funeral plan providers and intermediaries will have to stop trading from 29th July 2022.
The Race For ESG Regulation Begins
The coming months are vital for financial institutions as they prepare for European environmental, social, and governance (ESG) regulatory compliance. The new rules are due to snowball this year prompting warnings that firms should begin locking in their data provisions. Whilst the application of rules means regulations won’t come into force until later this year, financial institutions and corporates have been urged not to delay getting their data setups in order.
EcoFact Head of Regulatory Advisory; Gabriel Webber, has encouraged financial institutions and corporations to “engage as early as possible with your internal and external stakeholders to ensure that you have the data that you need to report… because you will need to have a lot of data coming from investee companies, the companies you are lending to and are insuring.”
Hacking Attacks Launch Across Europe To Defend Ukraine
While Ukrainian forces fight against the Russian military’s invasion, hackers from around the world are causing disruption to Russia’s digital infrastructure. Hacking groups such as Anonymous and the Cyber Partisans have claimed responsibility for cyberattacks on Russia’s banks, state broadcaster RT, and a Belarusian rail network reportedly used to move troops from Russia to Ukraine.
According to Independent, the intention is to “keep the Russian IT apparatus busy and to provide Putin’s hacker troops … with defensive work so that they cannot do anything in Ukraine or the West. Obtaining information is also an important point and you just don’t see a lot of what activists are currently doing.”
Whilst cyber-attacks are unlikely to be decisive and will not by themselves produce victory, particularly against a large and powerful opponent, they do offer strategic advantage and form a large part of military conflict.
REG Workforce Event To Puttshack
On the last Thursday of each Month, the REG workforce come together for a monthly social event. Due to COVID-19, getting together in the office was difficult, therefore monthly Microsoft Teams calls had to make do, so we were all very pleased when restrictions were lifted and we were able to meet face to face.
The monthly work events are organised by a different person each month, for February’s get-together, Sacha Skerton, a customer success representative at REG, organised a tournament of mini golf at Puttshack.
We would like to congratulate our Sales Director, Ady Hall, for coming in first place scoring over 300 points!