By Jack Kudale, founder and CEO at Cowbell, provider of the industry’s first continuously underwritten AI-powered Cyber Insurance for SMEs.
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The world of business changed so much in the last year. When companies sent employees to work from home at the start of the Covid-19 pandemic it sparked massive growth in digital footprints. That growth provided more opportunities for cybercriminals to infiltrate organizations, putting small and mid-size businesses at greater risk, given their already limited budgets and resources dedicated to cybersecurity.
The good news? That same growth in digital footprint ultimately gives cyber insurance companies more information to assess the individual risk profile of each policyholder, to support more precise underwriting and to help protect clients.
Working From Home Changed Everything
The rapid move to remote work made it hard for security professionals to keep up the pace with updating infrastructures to support an online-all-the-time, connect-from-anywhere workforce. It made networks easier to target with many employees working from home on unprotected Wi-Fi networks. The exposure of unencrypted servers has become a new problem in addition to the ever-present business email, suppliers and third-party vendors, which have always been known as cybersecurity challenges.
However, many believe remote work is here to stay. Despite many executives wanting their employees to reutrn to the office, they’re struggling to make it a reality. Additionally, 55% percent of employees surveyed by Pricewaterhouse Coopers said they would prefer to be remote at least three days a week. Where does that leave boardrooms on awareness of risk and ability to take action?
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The most recent PartnerRe and Advisen report shows that boards and senior management are becoming more aware of cyber threats. Demand for cyber insurance from those leaders is now the third most common reason for new and increased sales. Also contributing to increased cyber insurance sales is the undeniable “fear factor” stemming from cyber-related breaches happening to businesses of all sizes — if it could happen to them, it could happen to me. Not only are more companies buying cyber insurance policies, the corporations that do have them, are asking for higher limits. Sixty percent of cyber insurance brokers and underwriters told PartnerRe and Advisen their clients are looking to increase coverage when they renew.
The State Of Cyber Insurance Today
The insurance industry may have to face the fact that oftentimes we aren’t prepared to cover the cost of massive security breaches. When it comes to large property risks, insurers operate with a mountain of exact data that can assess risk down to the nth degree probabilities and risks to very specific geo-locations.
Climate change is a large property insurance risk that will play out over decades, not seconds. However, cybersecurity risks evolve at a pace that insurers have rarely seen, and they involve risk rating requiring an understanding of both insurance and cybersecurity. Many carriers are now disconnected from the risk they have underwritten for the past few years as tech stacks change and evolve with the risks, and those risks are only getting bigger.
What Executives And Insurance Providers Can Do
With the seemingly never-ending business risk associated with cyber events — from business interruption to revenue loss to regulatory enforcement actions — executives are beginning to realize their responsibilities in understanding and protecting their companies from those risks. For one, understanding where to start is important and great knowledge can come from working with an insurer that has the technology tools and capabilities to truly understand cyber risk.
Cyber insurance companies like mine know that cyber insurance has been a complex and lengthy process to undertake. On the “people side,” a good cyber insurance company will add value in terms of knowledge and education and will make things simple to digest, as they relate to risks and what kind of coverage is best.
On the “tech side,” these companies are better equipped to assess the risks of cyberattacks and improve the underwriting process. We do so by continuously monitoring clients’ status through all phases of risk mitigation, recovery and response as well as the aftereffects.
Those constant and individualized risk ratings allow brokers and consultants to ensure coverage is exactly what clients need and can be adjusted whenever they like. That process is getting even better with the increased amount of data in the risk pool paired with AI-powered processes that create an environment where risk selection and pricing can be refined even more accurately.
Now underwriting is getting faster, more precise and more accurate as well. Plus, bias and errors are eliminated. In the end, this benefits everybody involved. The new data supports data-driven, unbiased underwriting and helps create customized policies. Brokers can then help their clients more quickly, insurers get a more accurate look at their risk portfolio and ultimately policyholders get the value they are looking for with individualized risk assessment.
Final Thoughts
All of this means that though businesses are finding themselves in the crosshairs of cybercriminals, executives are starting to recognize the value of investing in cyber coverage and partnering with cyber insurance providers that have the tools and the knowledge to protect them — and that protection will only get stronger as digital footprints expand during this pandemic and into the future.
