Digitalization trends and big losses from cyber-crime spells potential for cyber risk insurance
A threat to businesses and by extension, economies around the world, cyber-crimes are estimated by Atlas VPN to have cost over the world’s businesses $25 billion in damages between 2015 and 2020.
Their disruption extends far beyond a single company. The attack on network management company SolarWinds which was identified in December 2020, gave hackers access to emails at the US Treasury, Justice and Commerce departments among others. The breach at Colonial Pipeline ended up causing a vital east coast pipeline to be shut down for six days, pushing gasoline prices to their highest level in 6.5 years, and caused thousands of gas stations to go without fuel.
So what is cyber liability insurance and why is it a business opportunity?
- What are some common cyber security risks?
This a snapshot of some vulnerabilities as identified by the Open Web Application Security Project (OWASP), a non-profit organization which provides updates on security vulnerabilities:
Injection - when the attacker’s hostile data tricks the interpreter into executing unintended commands or accesses data without proper authorization
Broken authentication - when attackers exploit weak authentication protocols to compromise passwords, keys, or session tokens.
Sensitive data exposure – when attackers exploit web applications and APIs that are not properly protected to conduct credit card fraud, identity theft, or other crimes.
Security misconfiguration – this is a common issue resulting from insecure default configurations, incomplete or ad hoc configuration, open cloud storage among others.
- What is cyber liability insurance?
While the details vary, cyber liability insurance or cyber risk insurance generally covers a business for the costs of data restoration, business losses etc. In 2020, written premiums for standalone cyber insurance increased by 29%, reflecting an increased demand among businesses for more specific cyber protection.
- Why is cyber insurance a business opportunity?
Businesses are being powered by technology trends like cloud, artificial intelligence, blockchain, data analytics, and digitalization accelerated by COVID-19. But in a 2021 survey conducted by Munich Re, 81% of 5,507 C-suite executives polled feel their company do not have adequate cyber insurance coverage. Many remain unaware of cyber insurance products on the market.
- What do businesses want cyber insurance to cover?
The top five pre-incident services identified in the 2021 Munich Re survey are: network security, backup of critical systems and data, anti-malware tools, identity and access, and IT security consulting.
The top five post-incident services identified are: data restoration from backups, 24- hour help hotline, forensic services after an incident, legal advice, and consulting in case of extortion.
- Where does PolicyDock fit-in?
PolicyDock has a suite of APIs that are trained with artificial intelligence and machine learning, giving insurers the speed necessary to issue policies, process claims, visualise trends, and remove products that appear repeatedly in the system under a different name. Moreover, we offer a white label solution which means our APIs can be given to cyber security firms, while re-insurers can provide these to an insurer to host. Brokers benefit from a direct-to-consumer platform.
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