28 September 2017 Insurance

A better understanding of cyber data can empower underwriters

Cyber crime is hitting the headlines on a regular basis. Some estimates suggest it cost the global economy $450 billion last year.

With economic losses so high, there is clearly an opportunity for the insurance industry to provide coverage – if it can become comfortable pricing the risk. One start-up, ThreatInformer, claims it can help insurers and brokers do this.

ThreatInformer is one of more than 20 start-ups insurers can engage with consumers at the annual Intelligent InsurTECH conference on October 3 in London. Click here to find out more.

The start-up, which performs automated cyber insurance assessments of proposers, was founded by Ryan Jones and Richard Wells.

“In conversations with underwriters, I was told of frustrations with the available cyber data which was not appropriate for assessing cyber insurance risk,” said Jones.

He explained that tools are either too technical and not designed for an underwriter, expensive consultancy lead engagements, or paper-based questionnaires.

ThreatInformer’s approach is to “empower the insurance industry” by delivering cyber data, but in the language and format that works best for brokers and underwriters, explained the start-up founder.

The company’s assessment data is tailored to each stage of the placement process—from the first phone call about cyber to a meeting to discuss coverage to pricing a risk to managing a cyber portfolio.

Although, according to Jones, there are some insurers and brokers with a strong understanding of cyber risk, there are not as many as there need to be in the market.

Because of the limited amount of knowledgeable cyber insurance professionals, some insurers are turning to costly external consultants.

“Regardless, experts are only as good as the information at their fingertips and are limited in the time they can spend evaluating each risk by premiums,” he said.

For Jones, ThreatInformer’s mission is to get data to underwriters and brokers so that they can make decisions “swiftly and confidently”.

Brokers currently face three main difficulties in recommending cyber cover: assessing their clients’ needs; providing effective risk management guidance; and understanding the quickly evolving and non-standard policies.

There are no standardised methodologies for quantitatively assessing cyber risk across a whole organisation, explained the start-up founder.

“With little or patchy knowledge of the cyber risks that specific businesses face, recommending cover is very challenging.”

Risk management guidance is hampered by the lack of knowledge and little standardisation in security controls.

Jones added that there are not any security products, such as anti-virus software of firewalls, that are certified to protect clients to a certain level or to protect against attacks over a certain period.

“Making recommendations, even when the risk is known, is as much to do with finding the products that work within the company’s environment as much as the level of protection the offer,” he said.

Additionally, products on the market vary widely and are constantly evolving, which makes understanding the whole market a very significant challenge.

Jones stated that he’s seeing brokers stick to one policy they are comfortable with more often than working with a wider variety of providers to find the best fit for clients.

“Today, brokers have very little cyber risk data designed for them, yet it falls to brokers to explain cyber risk and cyber coverage benefits to their clients,” he explained.

What makes ThreatInformer stand out from the crowd is that, from inception, it’s been focused on helping the insurance industry, claimed Jones.

“We perform cyber insurance assessments, rather than cyber risk assessments. When we provide data to brokers, we include scenario exports specifically to bring risk alive when speaking with proposers. With underwriters, we align all risk data with their own policy wording so our data is aligned to their decision-making process.”

Jones said that, in two years’ time, ThreatInformer will have performed over 100,000 assessments of proposers.

“Our data sets will become extremely valuable to future cyber risk modelling and the reinsurance markets,” he said.

The company is also building a network of brokers which it will use to help new cyber focused MGAs bring their products to market.

ThreatInformer is one of more than 20 insurtech startups attending Intelligent Insurer’s Intelligent InsurTECH conference on October 3 in London. Click  here to find out more.

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