Search
Close this search box.

Cyber insurance trends to look for in 2021

pexels-darlene-alderson-4389987

Cyber insurance trends to look for in 2021

The cyber insurance industry is rapidly evolving, opening doors for stronger relationships between insurers and policyholders.

The cyber insurance firms that will be ahead of the curve are the ones that offer helpful tools, speak in layman’s terms and collaborate with the cybersecurity sector.

According to recent research conducted by Cowbell Cyber, 65% of small and medium-size businesses (SMEs) are planning to spend more on cyber insurance as part of their cyber resilience plan in the next two years. This comes as little surprise in the midst of COVID-19 as cybercriminals have become more opportunistic, and have developed new tactics to wreak havoc on their victims.

It is critical, now more than ever, for organizations to insure their most valuable assets, which of course includes their digital assets.

As the cyber insurance market evolves, industries of all types are realizing the need for specific, tailored cyber policies to address their unique needs. The coming year will usher in a wave of transformation for cyber insurance. Here are my three predictions on where the cyber insurance industry is heading.

Cyber insurance education will continue to grow.

The cyber insurance industry still has a long road ahead in educating, not only potential policyholders but also agents and brokers. But over the next few years, the educational gap should get smaller. In order to do so, insurers must offer accessible, easily digestible cyber policies for those who aren’t as familiar with cybersecurity, while still ensuring the intelligence and speed behind the policy can keep up with today’s digital landscape.

Businesses are increasingly becoming aware that cyber insurance is a necessity rather than a luxury. Many of them, however, aren’t sure how to select the right policy. In fact, according to research by Advisen and PartnerRe, the top three obstacles to selling and writing cyber insurance are:

  • Not understanding exposures;
  • Not understanding coverage; and
  • Cost.

Having a clearer picture and understanding of exactly what cyber attacks are covered — and what is not — is vital for policyholders. Further, the cyber insurance industry needs to continue getting better at explaining exposures and risks, leading to more transparency overall.

Ideally, the cyber insurance process should be 100% online, eliminating outdated and confusing questionnaires that result in unverifiable assessments. Going into the next few years, insurers will remove unnecessary jargon from policies and deliver an improved experience for both policyholders and insurers. Insurers also will provide helpful online tools for policyholders, which will educate them on the risks that are most threatening to their particular organizations.

Cybersecurity and insurance will develop close partnerships.

Once considered separate industries, the cybersecurity and cyber insurance sectors are growing closer together. This will create some interesting opportunities for both sides. For example, if a company has good cybersecurity measures in place, they’ll likely receive some insurance “coverage credits” akin to earning better auto insurance rates (thanks to driver telematics) when you’re a good driver, you earn better auto insurance rates and options.

Cyber resilience requires both cybersecurity and cyber insurance. In pursuit of cyber resilience, organizations deploy cybersecurity tools for threat protection, detection and mitigation. When an incident actually occurs, they need to be prepared with a response and recovery plan. Technology helps, but cyber insurance mitigates loss in the aftermath of an inevitable breach.

In the future, we will see insurers working closely with cybersecurity experts to provide coverage for more sophisticated attacks such as ransomware, cyber extortion, social engineering and business interruption.

Insurance industry language will become more standardized.

As mentioned above, one of the common reasons why businesses lag in adopting cyber insurance is a lack of coverage understanding. The cyber insurance industry has a lot of work to do in order to establish clarity. This includes dedicating simple terms to refer to each type of sensitive information, whether that be corporate files, health records or personal data.

Both security practitioners and insurers need to deploy clear messaging that illustrates exactly what risks businesses may have and how they can protect themselves. In addition, all stakeholders should work off of a single source of truth, curating policies with the philosophy that technology and comprehensive assessment will deliver the most protection.

The cyber insurance industry is rapidly evolving, opening doors for stronger relationships between insurers and policyholders. The cyber insurance firms that will be ahead of the curve are the ones that offer helpful tools, speak in layman’s terms and collaborate with the cybersecurity sector, empowering policyholders to learn more about the cyber landscape, as it relates to their particular business sector.

Leave a Reply

Your email address will not be published. Required fields are marked *

Related posts

Insurance-technology

Hard Market Needs Tech & Creativity: Navigating Challenges in the Insurance Industry

The insurance market is experiencing significant instability due to inflation, the global pandemic, evolving cybersecurity risks, and climate change. According to experts at Send’s INFUSE webinar titled Navigating the Hard Insurance Market, innovative technology and creative product design could be key in bringing stability to this challenging environment. Rising Risks and Challenges The growing frequency of weather-related disasters has especially made risk assessment difficult for insurers. Tandis Nili, managing principal of global risk management at Epic Insurance Brokers, highlighted that underwriting has struggled to keep pace. “Weather patterns are changing rapidly, and the underwriting models we’ve relied on are no longer sufficient,” Nili remarked. The traditional methods of predicting risks, based on past events, are no longer applicable as 100-year events are now happening much more frequently. Leveraging Technology for Stability Martina Conlon, executive principal at Datos Insights, emphasized the importance of utilizing automation and artificial intelligence (AI) to address this volatility. AI-driven predictive models, she explained, can assist insurers in making more accurate risk assessments, which in turn leads to better pricing and more efficient processes. “It’s all about moving beyond traditional tools like spreadsheets and policy systems,” Conlon said. By integrating more advanced technology, insurers can streamline operations and enhance accuracy in their assessments. Creative Product Innovation Another critical aspect in managing the hard market is innovative product design. Jennifer Kyung, CEO of NextGen Underwriting, discussed the opportunities for insurers to rethink product structures. This could involve adding new lines for emerging risks or restructuring existing products to share the responsibility between insurers and clients. For example, home insurance policies could evolve, particularly in regions facing heightened risks due to climate change. “This is a real opportunity for underwriters to creatively design products that better align with future risk landscapes,” Kyung added. Preparedness: A Key Lesson Lastly, the past few years have highlighted the need for insurers to be prepared for the unexpected. While it’s impossible to predict future events, the industry can ensure that it has the right tools and capabilities in place to respond swiftly and effectively when crises arise. As Kyung put it, “We may not predict what’s coming, but we can be ready for whatever it is.” Conclusion In today’s volatile market, insurers must embrace both technological advancements and creative product design to navigate the evolving risk landscape. By doing so, they can enhance stability, build consumer trust, and be prepared for future challenges.

Read More
Commercial Auto

Around the P&C Insurance Industry: November 20, 2024

Porsche Auto Insurance:Launched an unlimited insurance product for high-mileage Porsche owners driving over 10,000 miles annually. This complements their pay-per-mile policies, allowing owners to choose fixed premiums or mileage-based options. Multiple vehicles on a single policy can also have mixed coverage. Safeco Insurance:Entered a book transfer agreement with Main Street America Insurance, enhancing its personal lines presence in 22 states. Main Street America is shifting focus to commercial lines, including commercial products and bonds. Resilient Cities Network & Tokio Marine Group:Partnered to bolster urban resilience projects. The collaboration supports the Resilience Finance Taskforce, helping cities globally scale investment strategies for resilience and climate adaptation. Skyward Specialty Insurance Group:Introduced life sciences liability coverage tailored for the life sciences industry, addressing risks such as medical liability, errors and omissions, and general liability. This strategic move supports the complex insurance needs of healthcare innovators. AAIS Partner Program:Welcomed Sproutr, offering AAIS members access to tools and services that streamline operations and foster growth in insurance processes. Duck Creek Technologies:Opened its second Center of Excellence in Warsaw, Poland, enhancing global customer service capabilities, particularly in Europe, the Middle East, Africa, and the Asia-Pacific regions. Liberty Mutual & Coursera:Launched an entry-level course, Insurance Sales Agent, to train learners in risk management, sales, and ethical practices, equipping them for careers in insurance sales. World Insurance Associates:Acquired United Counties Insurance Group of Old Bridge, NJ, expanding its regional operations. Previsico:Unveiled Instacasting, a flood mitigation solution using rainfall data for real-time surface water flood predictions, enabling faster and more precise response strategies.

Read More
Try your instant quote