The cyber insurance market is booming. As an expert from CyberCube tells the Re/insurance Lounge, technology brings solutions as well as problems, and insurtech could be key to helping underwriters, brokers and others cope with the surging demand.
Cyber risk analytics specialist CyberCube brings together two of the most striking trends in the insurance industry today: the rise of insurtech, which in 2020 had a record year for funding and deals, and the growth of cyber insurance, among the fastest areas of premium growth, with a market expected to see more than 20 percent annual growth over the next few years.
COVID-19 and the move to remote working has turbocharged already fast-growing markets. To discuss the opportunities as well as threats—and CyberCube’s approach to both—Intelligent Insurer’s online platform, the Re/insurance Lounge caught up with Ross Wirth, the company’s head of client management and technology services.
As he explained, despite the substantial growth in cyber cover and the technology to deal with it, we may still be very much at the beginning of both.
“We could see a world where there is a potential minimum level of cover required to operate a business,” said Ross Wirth, CyberCube.
Room for growth
Wirth doesn’t underplay the potential for cyber insurance to continue to develop—and rapidly. “We believe that cyber risk is going to be one of the largest, if not the largest, peril in P&C insurance, over the next few years,” he said.
He is among those who believe we’ll eventually talk of PC&C lines—property, casualty and cyber insurance.
That’s mostly because of the risk profile, with risks proliferating and becoming more sophisticated. Ransomware, for instance, remains a huge problem and has been exacerbated by the COVID-19 pandemic.
“We expect it to continue to accelerate and to become more complex,” he said. That may only get worse when it’s combined with technologies such as artificial intelligence (AI).
“Ransomware has historically had groups of individuals working on it. Now we’re starting to see the application of AI and machine learning. That could give it the ability to grow and expand exponentially, so it’s potentially very challenging.”
At the same time, regulatory pressure is growing on companies to address the risks, said Wirth. “We could see a world where there is a potential minimum level of cover required to operate a business.”
In this environment, the need for insurance and risk management services to support businesses has long been obvious. That, according to Wirth, is where CyberCube comes in.
An evolving risk
Insurers, Wirth said, face a unique challenge when it comes to cyber risks.
“Cyber is a fast-growing peril. It is also one of the newest and most differentiated. A hurricane doesn’t look at the last hurricane and decide to do things differently to do a better job,” he pointed out, whereas those planning cyber attacks do.
CyberCube was incubated within cybersecurity specialist Symantec in 2015 and spun out as a separate organisation in 2018. It completed its second round of fundraising last year. Its role was to widen the security its parent provided to institutions and organisations within their firewalls by using that data to help those outside.
“There is an opportunity to use that data and bring it out to those organisations focused on risk transfer,” he explained.
Today the company provides a range of risk analytics:
- Cyber catastrophe models, with 29 different modelled scenarios to inform reinsurance decisions and identify risk accumulations;
- Security and exposure data analytics for underwriters to evaluate specific organisations’ risk profiles, looking at issues such as open remote desktop ports, email security posture and multi-factor authentication; and
- Solutions for brokers to understand and report on clients’ cybersecurity profiles and needs.
The firm works with Lloyd’s, Hiscox, and Munich Re, as well as Aon, Guy Carpenter and Lockton among others, and Wirth said the business is targeting substantial growth, with 30 to 35 percent headcount growth expected for this year alone.
“We want to move beyond standalone apps and embed our data signals and models into our clients’ workflows.”
Wirth’s ambition is fuelled by the rising need for analytics as risks proliferate and the market for cyber insurance continues to grow rapidly.
“We see cyber risk becoming the most important peril in insurance,” Wirth reiterated. “This is going to be a fundamental change that we haven’t seen for nearly a century in the insurance market.”
Related to that, he expects the cyber peril to impact insurers’ businesses, affecting other lines. Again, this will drive demand for solutions to make sense of the risks and exposures.
“A lot of organisations have dedicated cyber underwriters who are very involved with it, but that’s not required for everyone. We enable more generalist underwriters focused on the broader businesses to gain a base understanding and knowledge of cyber,” said Wirth.
Finally, those already using analytics need to make better use of them and integrate them into their businesses. That’s one reason Wirth sees the next stage of growth of CyberCube being as much about its services as its offerings.
“Many are using all our data and signals today, but they’re using that separately from their underwriting desktop,” he explained.
“We want to move beyond standalone apps and embed our data signals and models into our clients’ workflows and ecosystems so they can have this data at their fingertips during decision-making.”
This will help highlight the most important analysis for insurers, and enable them to concentrate on the risks.
“We’re helping streamline that process so underwriters can focus their time on the areas that make sense, rather than wading through all the noise that’s out there,” he concluded.
To view the full Re/insurance Lounge session click here
CyberCube, Technology, Cyber, Cyber Risk Analytics, Insurance, Reinsurance, COVID-19, Ross Wirth, UK