UCL Department of Science, Technology, Engineering and Public Policy


Lloyds of London and UCL Researchers launch IoT Risks and Opportunities Report

19 November 2018

Today Lloyd’s of London releases its latest innovation report featuring the work of UCL researchers Dr Leonie Tanczer, Dr Ine Steenmans, Dr Irina Brass, and Dr Madeline Carr.

The research is part of UCL STEaPP’s Digital Policy Lab and its Futures and Foresight efforts, and was run in collaboration with the PETRAS Internet of Things Research Hub.

Over the past 18 months, the UCL research team worked with the Lloyd’s Innovation Team to analyse the future impact of Internet of Things (IoT) technologies on the insurance sector. IoT refers to systems that are connected to the Internet and collect and use data to operate – often with effects in the physical world. As an umbrella term, IoT includes everything from smart fridges and lightbulbs to wearable devices or even implants up to remote sensors in the physical infrastructure. The number and range of these systems is expected to significantly transform society and the insurance sector is seen as an important element of modifying security behaviour.

The report outlines opportunities and challenges created by the IoT and refers to the current regulatory landscape. The document features futuristic, but probable scenarios in four critical sectors. Each scenario describes how IoT technologies could generate and exacerbate risks that could cause losses in several lines of business:

· Infrastructure and water

· Agriculture

· Marine

· Smart Home

Lead author of the report, Dr Leonie Tanczer said: “We are extremely proud of our collaboration with Lloyd’s on this important issue. The report is based on extensive research and puts forward important insights that can not only guide the insurance sector, but also the policy community, and industry stakeholders.”

The key five findings of the report include:

  1. IoT will lead to data capture and management at an unprecedented scale. While this could mean better risk assessment, it may also increase policyholder concerns about the use and accuracy of their data.
  2. New types of threats and harms will emerge, which will increase the pressure on insurers to come up with new products and services that are closely aligned to customer needs.
  3. The scale and variability of the type of disruption that could occur will affect multiple sectors and lines of business. The range of security standards that currently exist will make it hard for insurers to make risk assessments in the future.
  4. Insurance policies will increasingly influence and manage risk behaviour. The personalisation of policies through the use of big data will be capable of predicting and reducing risk.
  5. There are critical blind spots in the regulation and legislation of IoT devices and their impacts. These include uncertainties surrounding attribution and liability should anything go wrong.

The findings of the report are underpinned by a comprehensive five-stage research approach, developed by UCL’s Futures and Foresight expert Dr Ine Steenmans.

Dr Steenmans said: “Technology foresight studies typically generate future impact stories that are noticeably different to the status quo. But more often than not it leaves us with the question ‘so what?’. We believe that when we focus the same effort and attention onto asking more fundamental questions about the nature of change in threats and vulnerabilities, we stand to benefit even more from this type of work.”

The team’s approach to explore not just substantive but also systemic change through a scenario-based approach resonated with Lloyd’s of London. Trevor Maynard, Head of Innovation at Lloyd’s said: “IoT has the potential to radically change the insurance industry by providing real time detailed data which can be used to develop new products and gain a much deeper insight into the risks we insure. We have been delighted to work with UCL to provide this comprehensively researched report which highlights some key opportunities and threats with this emerging technology.”

This is echoed by Dr Madeline Carr, course leader for STEaPP's MPA in Digital Technologies and Public Policy. She sees the piece as an important step towards impact-driven research and teaching practiced at the department: “We’re developing people equipped to address the socio-technical challenges of cyber security in the 4th Industrial Revolution in this programme. It’s exciting to work with a partner like Lloyd’s and then to be able to pass that experience and research directly onto our MPA students.”

The report is published at a critical moment considering recent measures taken by the UK Government on IoT security. Dr Irina Brass, who provided the regulatory analysis for the report said: “The IoT brings multidimensional risk that sits at the intersection between data protection, cybersecurity, physical security and safety. In this time of regulatory change, the insurance sector plays a crucial role in shaping responsible cyber risk management strategies and practices.”

The team presented the research findings at the launch event on Monday 19 November 2018 in London.

The report is publicly available and can be downloaded here from Lloyd’s Emerging Risk website.