2015 Most Dangerous Emerging Risks

Implantable Devices: Medical Devices Open to Cyber Threats

The threat of hacking implantable defibrillators and other devices is already growing.
By: | April 8, 2015 • 9 min read

SCENARIO: Pay off an anonymous hacker or face the possibility that patients with implantable defibrillators would die. That was the dilemma facing Janet Smith, CEO of Midtowne Community Hospital.

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Too late she found out that the computer system of one of the surgical practices employed by the hospital was hacked. It was a simple enough operation. One unthinking click by the administrative staff on a link in an official-looking email, and the system was surreptitiously compromised.

The back-door access to the computer system provided the hackers with a treasure trove of unencrypted patient data including name, medical history, type of medical device implanted, and models and serial numbers of the devices.

While the hackers had a selection of devices to choose from — pacemakers, insulin pumps, cochlear hearing implants, blood glucose monitors and deep brain stimulators, among others — they targeted patients with implantable cardiac defibrillators (ICDs), which monitor and respond to heart activity by sending shocks to the system to restore normal heart rhythm.

The ICDs were designed to be wirelessly connected to external wands and ICD programmers. Data collected in the wands was downloaded to the IT system in the surgical practice so the physicians could review and manage each patient’s medical problems.

The RFID-enabled wands were supposed to be unidirectional, but the hackers were able to reverse-engineer the access after determining the radio frequency used and the engineering specifications of the ICDs and wands, which they found online — mostly in the technical and user manuals published by the manufacturers.

Each of the ICDs contained a small computer chip similar to those found in smart thermostats, televisions and refrigerators, all of which have been hacked recently to send out spam or just annoy users.

The hackers wrote and inserted programming code into the IT system of the surgical practice so that when information from the ICD devices was downloaded, code would be inserted that could induce fatal heart arrhythmia via the patients’ defibrillators.

It only required the hackers to trigger the code to activate it. And that’s what they threatened to do if the ransom was not paid.

While the extortion scheme was similar to the ‘Cryptolocker’ shakedown — which locks organizations out of their own files, forcing them to pay for access — this ICD threat offered a much more deadly outcome. And there was no positive outcome that Smith could see.

ANALYSIS: The hacking threat to implantable cardiac defibrillators has been known since at least 2008, when a team of university researchers proved it was able to reverse-engineer an ICD’s communications protocol to reprogram it to change the operation of the defibrillator, including its therapy settings.

Kevin Fu, an associate professor at the University of Michigan, who was on the team and is a leader in the field of device security research, likened implantable medical devices to unlocked cars during a presentation at Dartmouth University.

“There are people, if given the chance, who will cause harm and we shouldn’t just leave our doors unlocked,” he said.

While hacking is usually done for financial reasons, there have been instances where physical harm was intended, he said, mentioning an attack seven years ago on an epilepsy support group website, where hackers embedded flashing animation that induced seizures in those using the site.

“I think it would be naïve to ignore the fact that some of these people exist so we need to at least have a certain level of protection against this kind of maliciousness,” Fu said.

Michael Thoma, vice president, chief underwriting officer, global technology, Travelers

Michael Thoma, vice president, chief underwriting officer, global technology at Travelers, said he was “not aware of any actual claim or incident beyond what is available in the literature that it can be done,” he said.

“When you stop to think about the environment we are heading into — where hospitals are completely relying upon electronic medical records that are integrated to control medical devices in hospitals and obtain information back from the devices — the scenario exists that something like that could happen.

“You read all the time about attempts to attack all sorts of institutions, and hospitals are not immune to that. When you think about the ‘Cryptolocker’ scenario, not only could it bring a hospital to a complete standstill, but the reputational harm would be huge.

“It would make what happened in Dallas after Ebola at that hospital look minor,” he said.

‘A Hard Line to Cross’

“At the end of the day,” said Todd Lauer, vice president, medtech division, OneBeacon Technology Insurance, “you can sum it up in one sentence: Anything is possible for a determined hacker.”

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Even so, he doubts most hackers would target the devices. “Most hackers are not looking to cause bodily injury,” he said. “They are looking to extort money from large corporations. That’s crossing a line. To cause bodily injury or death, that’s a hard line to cross.”

That leaves the possibility, however, that it could become a focus for terrorists looking to create panic and death, Lauer said.

Experts noted that as of now, hacking of implantable devices is only being done by researchers, universities and hackers who identify and expose security weaknesses.

“We are talking about something that certainly is possible, but it’s not an exposure that keeps me up at night as an underwriter.” — Mark Wood, president and CEO, LifeScienceRisk

Mark Wood, president and CEO of LifeScienceRisk, a series of RSG Underwriting Managers, acknowledged that it was “theoretically possible … . Am I aware that it’s happened? I have not yet seen a claim or a report that it’s happened.

“We are talking about something that certainly is possible, but it’s not an exposure that keeps me up at night as an underwriter.”

It’s more likely that instead of the sophisticated scenario portrayed above, hackers would simply use RFID to jam the devices with a denial-of-service attack, said Jerry Irvine, CIO of Prescient Solutions, who is also on the National Cybersecurity Task Force.

“They could basically overburden it so much that it can no longer react, so people will die or equipment will malfunction or give an overdose of medication,” he said.

“That’s the easiest thing you can do. You can do that from 100 to 300 yards away with targeted antennas or high-powered antennas. These are things that are not difficult to do.”

In addition, researchers have noted that many hospital IT systems lack cutting-edge cyber security.

“Unfortunately, computer security in many hospitals and similar providers reminds me of the very early days of computer security when security was the domain of system administrators and network security types,” said Gary McGraw, chief technology officer at software security consultancy Cigital Inc., in an article on SearchSecurity.com, a site of “Information Security” magazine.

McGraw likened hospital network security administrators to “plumbers who make sure that infrastructure is properly designed and operates smoothly. Generally speaking, though they are certainly important, plumbers are not very strategic thinkers and neither are system administrators.”

Federal Government Action

In 2012, the U.S. Government Accountability Office found that in controlled settings that did not involve actual patients, security researchers “recently manipulated two medical devices with wireless capabilities — a defibrillator and an insulin pump, a type of infusion pump — demonstrating their vulnerabilities to information security threats.”

04012015_04B_implant_devices_sidebarIt concluded that implantable medical devices (IMDs) are “susceptible to unintentional and intentional threats … . Information security risks resulting from certain threats and vulnerabilities could affect the safety and effectiveness of medical devices. These risks include unauthorized changes of device settings resulting from a lack of appropriate access controls.”

The report also noted that the “growing use of wireless capabilities and software has raised questions about how well [IMDs] are protected against information security risks, as these risks might affect devices’ safety and effectiveness.”

That prompted a review by the U.S. Food and Drug Administration, which two years later, in 2014, offered guidance to strengthen the safety of medical devices to better manage cyber security risks.

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“There is no such thing as a threat-proof medical device,” Dr. Suzanne Schwartz, director of emergency preparedness/operations and medical countermeasures at the FDA’s Center for Devices and Radiological Health, said at the time. “It is important for medical device manufacturers to remain vigilant about cyber security and to appropriately protect patients from those risks.”

Top concerns included malware infections on network-connected medical devices or computers, smartphones and tablets used to access patient data; and failure to provide timely security software updates or patches to devices or networks.

The guidance recommended to manufacturers that they consider cyber security risks as part of the design and implementation of medical devices, and submit documentation to the FDA about the risks they identified and the controls put in place to mitigate those risks.

It also recommended that manufacturers submit plans for providing patches and updates to operating systems and medical software.

Still, said Jay Radcliffe during a presentation at the 2013 Black Hat Conference, cyber security concerns have not been cited by the FDA as a reason for rejecting any implantable medical devices.

And, said OneBeacon’s Lauer, patching implanted devices is difficult, as it often requires surgery.

Manufacturers rarely seek to enhance devices via patching because it requires “an onerous regulatory process” with the FDA, said Tam Woodron, a software executive at GE Healthcare, in an article in “MIT Technology Review.”

The article also noted that reporting of incidents is not required by the FDA unless a patient is harmed.

A study by researchers at MIT and the University of Massachusetts at Amherst found that there are millions of people with wireless implantable medical devices, and about 300,000 such IMDs are implanted every year. The life of such a device can last up to 10 years.

Liability Concerns

Wood of LifeScienceRisk said that if a device malfunctions and results in bodily injury, regardless of the reason, there would likely be an allegation of product liability.

“There wouldn’t be any limitation, at least in the coverage we write, about whether a software error created the problem,” he said. “The malfunction in and of itself would trigger coverage if it caused bodily injury.”

If a carrier’s coverage did exclude software issues, the insured’s E&O policy would probably be triggered, he said.

As for who would be involved in such a claim, the list could be a long one, including the hospital, physician, caregivers, device manufacturer, Internet provider, cloud provider, and anyone who provided consulting services to anyone involved in the process, plus all of their insurance companies.

Lauer noted that when claims involve device manufacturers, a U.S. Supreme Court ruling prevents plaintiffs from relying on state negligence or liability rulings; the High Court determined that such laws cannot pre-empt federal laws and the FDA’s safety determinations.

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“The exposure is going to be different for any set of facts,” Wood said. “The more complicated the loss scenario, the more potential for coverage issues in trying to figure out whether and how a claim should be covered.”

If extortion or crime is involved, it’s unclear if that would be an insured loss, he said.
BlackBar

Complete coverage of 2015’s Most Dangerous Emerging Risks:

Corporate Privacy: Nowhere to Hide. Rapid advances in technology are ushering in an era of hyper-transparency.

04012015_04B_implant_devices_150px_mainImplantable Devices: Medical Devices Open to Cyber Threats. The threat of hacking implantable defibrillators and other devices is growing.

04012015_03_concussions_150px_mainAthletic Head Injuries: An Increasing Liability. Liability for brain injury and disease isn’t limited to professional sports organizations.

04012015_04_vaping_150px_mainVaping: Smoking Gun. As e-cigarette usage rises, danger lies in the lack of regulations and unknown long-term health effects.

04012015_05_aquifer_depletion_150px_main

Aquifer: Nothing in the Bank. Once we deplete our aquifers, there is nothing helping us get through extended droughts.

04012015_01_CS_superbugs50x50

Most Dangerous Emerging Risks: A Look Back. Each year since 2011, we identified and reported on the Most Dangerous Emerging Risks. Here’s how we did on some of them.

Anne Freedman is managing editor of Risk & Insurance. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.

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Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.


R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.

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We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?

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Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.

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Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now an where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.

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More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]