Outsmarted: the perils of smart vehicles
But the more connected they are, the greater the risks they pose, warns a new report commissioned by Zurich Insurance.
The report, ‘Smart cars and connected vehicles: privacy, security and safety considerations’*, states that automobiles should always be treated as if they are potentially hackable.
‘Individual automobile owners probably can do little more than take commonsense precautions as they would with their PC or smartphone, but commercial fleet owners should incorporate their vehicles within their companies’ overall network security strategies.’
Advances in technology mean that even a mid-priced car is remarkably ‘smart’, with some vehicles having as many as 50 electrical control units (ECUs). Some of these ECUs are instrumental to systems such as steering and braking; others can transmit maintenance and diagnostic information which can be read remotely, while integrated communications systems enable drivers to send and receive text messages using voice technology.
More than 60% of new cars worldwide are expected to have connected capabilities by 2017. Some manufacturers are incorporating elements of Apple’s operating system in their vehicles, and Google’s vision is that the car itself will become a connected Android device.
But it would seem that for every new solution, there are also new risks. There are a number of risks posed by such connectivity. One of those relates to privacy. Consumer privacy is regulated in areas such as banking, medical records and phone and internet use. However, in some regional jurisdictions (and more particularly, in the USA) data generated by vehicles is generally not protected, and consumers have little control over who can see their data and how it can be used.
In the future, the connectivity of vehicles to a ‘network’ will ensure improved traffic flow, less congestion, and potentially fewer crashes, but will also pave the way for ‘use’ based registration payments, the potential for carbon tax levies on vehicles (again, based on use and fuel consumption) and also ‘risk’ based insurance. The same technology can even be used to navigate vehicles to petrol stations when running low on fuel, and seamlessly pay for fuel at the pump.
Information produced by a vehicle and transmitted over the internet can be intercepted. Ultimately, it ends up on servers, making it a potential target for hackers. The information may be sold for purposes never contemplated by the vehicle owner. The concerns multiply with the number of connected systems. In addition to recording how fast a driver is moving and where they are going, intelligent automobiles also know the frequency of the drivers texts, who they are texting and who is texting them.
The vehicle itself can become a ‘hackable asset’. In the US, researchers with the Center for Automotive Embedded Systems Security demonstrated how to remotely take control of a vehicle through its telematics system. They also revealed that it was theoretically possible to hack a car with malware embedded in an MP3 and with code transmitted over a Wi-Fi connection, infecting many different vehicle functions. This is because the dozens of independently operating computers spread throughout modern vehicles are all connected through an in-car communications network. Insurers are already aware of the increased Cyber risk associated with connected cars and their link to a seamless network.
Another serious risk for smart car drivers is distraction. In the US, distracted driving has been described as a ‘dangerous epidemic’, and the National Highway Traffic Safety Administration has published guidelines to encourage car manufacturers to limit the distraction risk for in-vehicle electronics. Australia already has penalties for hand-held mobile phone use, but there are no restrictions on using any devices incorporated into the car’s dashboard or steering wheel.
As the go-to insurer for the transportation and logistics industry, Zurich takes a particular interest in promoting road safety and sponsoring research into the risks facing transport companies and fleet owners. We are also always searching the risk horizon – what truly lies ahead for the risk and insurance industry.
‘The rate of change in automobile-based information, entertainment, communication and computer-enabled safety technologies means that exposures and risks are multiplying faster than the risks can be fully analysed and quantified. Risk managers and underwriters will continue to be challenged to respond with creative solutions to this complex and constantly shifting risk landscape.’
*The report (PDF 341 kb) from the USA has been prepared for Zurich by Advisen.
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Zurich Insurance Group (Zurich) is a leading multi-line insurer that serves its customers in global and local markets. With about 55,000 employees, it provides a wide range of general insurance and life insurance products and services. Zurich’s customers include individuals, small businesses, and mid-sized and large companies, including multinational corporations, in more than 170 countries. The Group is headquartered in Zurich, Switzerland, where it was founded in 1872. The holding company, Zurich Insurance Group Ltd (ZURN), is listed on the SIX Swiss Exchange and has a level I American Depositary Receipt (ZURVY) program, which is traded over-the-counter on OTCQX. Further information about Zurich is available at www.zurich.com.