Santam Highlights Cyber Threats and Big Data Opportunities for SA Businesses

In a critical advisory to South African companies, Santam, the nation's largest short-term insurer, issued a stern warning about the mounting financial dangers posed by cybercrime, expressing concerns over the insurance sector's preparedness to counter such threats effectively. Drawing from its recent research, Santam highlighted how businesses view data as currency, an essential part of the transformative wave labelled 'big data' that's reshaping industries on a global scale.

Santam's note comes against the backdrop of South Africa's specific economic and socio-political challenges, ranging from financial instability to recurring load-shedding events and episodes of social unrest—factors that strain the capabilities of traditional insurance models.

Recent events have only heightened the industry’s challenges, with notable spikes in life insurance claims during the pandemic, and the subsequent turbulence of the July Riots in 2021 and extreme weather-induced disasters. While the pandemic and riots could be seen as singular events, a pattern of increasingly frequent severe weather points to an evolving risk landscape.

Additionally, Santam identified an aggravation in cyber-related threats. South Africa, as per the insurer, sees some of the highest costs incurred from cybercrime worldwide, with hackers continually enhancing the sophistication of their attacks, thereby inflating the financial and reputational costs for businesses, especially the more vulnerable small and medium-sized enterprises (SMEs).

Alarmingly, a mere 26% of businesses in South Africa have subscribed to cybercrime insurance cover, despite the nation grappling with an annual cybercrime cost upwards of R2.2 billion, and the rising incidents of ransomware and data breaches.

Santam stressed the necessity for local businesses to bolster cybersecurity strategies, carry out thorough risk assessments, and indulge in rigorous employee training. They also underscored the dual nature of big data as a potential risk and a source of opportunity for businesses—facilitating better decision-making, personalized customer experiences, optimized operational efficiency, and predictive analytics for risk mitigation.

The insurance sector, albeit progressing gradually, stands to reap significant benefits from harnessing big data. Santam delineated the advantages for insurance underwriting, fraud detection, customer experience, and fostering innovation through the development of new products such as sophisticated cyber insurance, and the use of insurtech.

As big data continues to revolutionize the landscape, Santam positions personalization, risk prediction, and product innovation at the core of prospective business insurance solutions. Santam's overview places an unequivocal emphasis on the profound level of strategic shift necessary for insurers, alongside advocating for the heightened need amongst business owners to procure comprehensive and forward-thinking insurance solutions in the face of digital threats and the promise of big data.