Are you insured for this?
Thursday, 20 June 2019
By Bernd Struben
Insurance has been around for almost as long as the spoken word.
Investopedia tells us the first written insurance policy was carved into an ancient Babylonian obelisk.
They don’t provide a date for it. But the Babylonian era would place it around 2000 BCE.
The obelisk had the code of King Hammurabi carved into it. Other characters indicated that if a debtor ran into unforeseeable difficulties, like disability or flooding, they wouldn’t have to repay their loan.
But the insurance business we’re more familiar with today didn’t really take root until some 3,500 years later.
That was in the late 1600s, when international shipping turned from exploration and raids to big business. And all those expensive cargos needed some kind of protection. Hence the process of underwriting was born. This saw various people take on financial risk for different parts of the cargo aboard a ship, in exchange for some premium.
It didn’t take long for insurance to spread into other sectors from there.
According to Wikipedia, the Amicable Society for a Perpetual Assurance Office (how great is that name?) was the first company to offer life insurance. That was in London back in 1706.
Today you almost certainly have insurance.
In fact, as an Australian, there’s no ‘almost’ to it.
Even if you’ve opted not to have private health insurance, you’re still covered by Medicare. Which is nothing more…or less…than taxpayer-funded health insurance.
But Medicare and any private health coverage are likely only the tip of your insurance iceberg.
You may have homeowners or renters (contents) insurance. Car insurance. Dental insurance. Life insurance. Income protection. Workplace insurance (if you’re an employer). And depending on where you live, you might have separate policies for fires, floods, or storm damage. There’s even pet insurance.
But are you insured against cyber terrorism?
That may sound like an odd question. But it’s one that the Australian government is urgently reviewing.
From the AAP newswire:
‘The Morrison government is weighing up whether to expand Australia’s terrorism insurance scheme to cover cyber terrorist attacks.
‘The study was revealed in an auditor-general report released on Wednesday which looked at the management of the Terrorism Reinsurance Scheme, which has grown to $13.4 billion since being set up in 2003…
‘The audit report revealed the ARPC had hired the OECD and Cambridge Centre for Risk Studies to do a year-long research study into the nature and cost of physical damage to commercial property, including business interruption, caused by acts of cyber terrorism.
‘The study would identify and explore current and prospective threats, likely scenarios as well as the practicalities of extending insurance coverage to include cyber terrorism in Australia.’
Cyber terrorism takes hacking to a new and frightening level.
Power stations are some of the more vulnerable targets. In fact, the Argentinian government believes a cyberattack may have been what knocked out the nation’s grid. The outage this past weekend also affected five other South American countries.
No fun that.
The graph below gives you an idea of just how quickly this threat has grown in the power sector alone:
Source: Kaspersky Labs / Bloomberg
Click to enlarge
And the rise of the Internet of Things — where all our gadgets are connected — will only offer more fertile ground for cyber terrorists.
As Bloomberg reported earlier this morning:
‘An autonomous systems defense company [Regulus Cyber] contends it has successfully spoofed the GPS mechanism of a Tesla Model 3 using the automaker’s latest Autopilot technology, sending the vehicle off its intended route.’
Spoofing, if you’re not familiar, means overriding legitimate GPS satellite signals with pirated signals. These could potentially bring a self-driving car to a halt in the middle of a fast moving freeway. Or cause it to run into other vehicles or even pedestrians.
In the case mentioned above, the Tesla vehicle on autopilot turned into a narrow pitstop 2.5 kilometres from its intended exit.
Tesla, as you’d expect, slammed the hack as a publicity stunt.
But the spectre of cyber terrorists taking control of an autonomous car — or a fleet of them — is surely something Australia’s Terrorism Reinsurance Scheme review will need to consider.
It’s also something that a range of companies working to prevent cyber terror attacks are pouring millions of research and development dollars into.
And for good reason.
The companies that develop the tech to stay one step ahead of the cyber terrorists are likely to become household names over the coming years. And their share prices could go through the roof.
Our in-house tech guru Sam Volkering has been tracking some of these companies since 2013. He calls the best of the lot ‘the cyber defenders’.
These are just some of the stocks with revolutionary technology and growth potential Sam has recommended to his subscribers over at Revolutionary Tech Investor.
It’s Port Phillip Publishing’s longest-running premium investment service. And one of my favourites.
Now a look at the markets…
Overnight, the Dow Jones Industrial Average closed up 38.46 points, or 0.15%.
The S&P 500 closed up 8.71 points, or 0.30%.
In Europe, the Euro Stoxx 50 index finished up 1.81 points, or 0.05%. Meanwhile, the FTSE 100 lost 0.53%, and Germany’s DAX closed down 23.22 points, or 0.19%.
In Asian markets Japan’s Nikkei 225 is up 142.98 points, or 0.67%. China’s CSI 300 is up 3.29%.
In Australia, the S&P/ASX 200 is up 22.07 points, or 0.33%.
On the commodities markets, West Texas Intermediate crude oil is US$54.45 per barrel. Brent crude is US$62.57 per barrel.
Turning to gold, the yellow metal is trading for US$1,365.18 (AU$1,979.38) per troy ounce. Silver is US$15.20 (AU$22.04) per troy ounce. (More on gold below…)
In the world of cryptocurrencies, one bitcoin is worth US$9,285.25.
The Aussie dollar is worth 68.97 US cents.
Why gold bugs love the Fed
Gold has now enjoyed four straight weeks of gains.
The overnight rise puts it at more than two-year highs in US dollars. And it’s within a whisker of another new record high in Aussie dollars. That record was set last Friday, when it reached an intra-day high of AU$1,981.
What mysterious forces do gold bugs have to thank?
The US Fed, of course. And the prospect of easy money for years to come.
Click to enlarge
As widely expected, the US central bank didn’t move to cut rates yesterday (overnight our time). But investors clued in to the Fed dropping the word ‘patient’ in reference to borrowing costs from its statement. Policy makers also distanced themselves from their 2% inflation target.
You can see the bounce in the gold price, highlighted in the chart above, in the hours following the Fed’s dovish comments. And the upward trend for gold looks set to continue.
Bloomberg cites Maxwell Gold, director of investment strategy at Aberdeen Standard Investments: ‘As concerns around slowing global growth and trade put further pressure on monetary policy globally, gold may see further support.’
With the Australian dollar likely to remain weak if the RBA follows through on its own expected rate cuts, we could be in for a new series of record highs in Aussie dollar terms.
That would be most welcome news to Australia’s gold miners and producers. Not to mention investors who hold their stock.