SA ranks 14th for the highest average in insurance claims associated with data breaches and cybercrime, and this is all but certain to get worse as cybercriminals harness artificial intelligence (AI), according to a report by Allianz Commercial.
The report by the corporate and speciality unit of global financial services group Allianz indicates that insurance claims involving cybercrime have risen in the past year, due largely to an increase in data and privacy breaches.
The cost of claims involving data breaches in SA reached $2.78m (R49.05m) in 2024, it said. The US had the highest average at $9.36m, followed by the Middle East ($8.75m), Benelux ($5.90m), Germany ($5.31m) and Italy ($4.73m).
“We are seeing more data privacy breach claims in the US where there is a growing trend for class-action litigation against large US and international corporations related to privacy violations, such as around consent and data usage,” said Michael Daum, global head of cyber claims at Allianz Commercial.
“The cost of some of these claims can be even larger than a ransomware incident, in the hundreds of millions of dollars.”
Allianz, one of the world’s biggest insurers and financial services groups, has a joint venture with Sanlam offering services to 27 African countries since September 2023.
Cybercrime has hit SA government and public institutions. An international ransomware group recently claimed responsibility for a crippling attack on the SA Health Laboratory Service, blocking patients’ lab results and compromising sensitive patient and government employee data. The department of public works and infrastructure lost at least R300m due to cybertheft in the past 10 years.
Allianz said the frequency of cyber claims greater than €1m in the first six months of 2024 was up 14% while severity rose 17%. Data and privacy breach elements are present in two-thirds of such large losses. Overall, the total number of cyber claims in 2024 is expected to stabilise after a 30% rise in frequency in 2023 or more than 700 claims.
The insurance company warned that criminals were now using artificial intelligence (AI) technology to intensify their attacks.
AI harnesses the collection and processing of vast quantities of data, including personal, health and biometric information, for training models and making predictions or recommendations.
But AI tools such as chatbots can create potential privacy, misinformation, and security risks if not managed properly, said Allianz. With so much data collected and processed, there is a risk of it falling into the wrong hands, either through hacking or other security breaches.
There was concern about breaches of privacy laws, such as whether organisations have proper consent to process data through AI.
Anna Collard, senior vice-president for content strategy at cybersecurity firm KnowBe4 Africa, warned that the implications of AI and children were of particular importance.
“These AI tools offer unprecedented opportunities for learning, creativity, and problem-solving, she said. “The personalised nature of AI chatbots, with their ability to provide quick answers and tailored responses, makes them especially appealing to young minds.”
However, “as with any transformative technology, AI brings with it a host of potential risks that parents, educators, and policymakers must consider carefully. From privacy concerns and the danger of overtrust to the spread of misinformation and possible psychological effects, the challenges are significant”, she said.
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