Turning cybersecurity disruption into an opportunity
Insurance agencies can focus on value, clarity, simplicity and relevancy when matching an insured with the right cyber insurance coverage.
If we learned anything in 2020, it was that agile, innovative insurance organizations fare better when faced with unpredictable disruption.
Insurance has traditionally lagged behind others in the digitization of its business operations. It follows that the industry faced many hurdles when the pandemic hit. But consumers and businesses alike still need financial protection from cyber incidents. Serving them online created both challenges and opportunities.
Spotlight on cyber coverage
Valuable insights about business asset protection and cyber risk management have emerged from the pandemic’s effects on small and midsize businesses in 2020. For many businesses, adapting to a completely new model where employees work remotely from a makeshift home office with the majority of business transactions operated online over the phone or the internet was a matter of survival.
The transition to remote work and a digital-first approach to all business operations spawned a new level of dependency on internet-connected devices and systems. Insurance coverage that had not been a priority in the past, such as cyber insurance, is now quickly becoming a necessity for business owners across all sectors.
In the wake of the pandemic, business owners started to scrutinize their current cyber coverage and demand faster-than-ever changes to coverages and policy terms in order to match their newly identified needs for financial protection against cyber incidents.
Insurance agencies step up
It is worth noting that the surge in cybercrime and ransomware attacks only made the problem more acute, requiring agents to bring cyber insurance to the conversation in a timely manner. Doing this is far more than a due diligence matter. It helps insurance agencies avoid an errors and omissions (E&O) claim. It also builds trust with their clients because this means that insurance brokers are looking out for the best interests of their clients by protecting their assets from cyber incidents.
Most importantly, insurance agencies were not exempt from the disruption. They, too, had to learn and adopt technologies that would allow their staff to work remotely while addressing their clients’ increased demand for more sophisticated cyber coverage. The adoption of online services and systems for preparing quotes, issuing policies and managing policy documents brings unprecedented efficiencies, simplicity and speed throughout the insurance process while delivering a significant competitive advantage to early adopters of insurance digital solutions.
For example, data such as firmographic business information should flow seamlessly from one system to another without any manual intervention. Such systems should be used consistently and updated synchronously across all insurance processes and documents. Furthermore, in the case of cyber insurance, collecting and processing, in one vertically integrated system, security and risk data online using automation, artificial intelligence, and other modern technologies will yield many additional benefits.
Not only will risk data flow in real-time from the insured’s organization to agents and underwriters, powering a rapid, accurate and unbiased underwriting process, but policyholders could also benefit from the output of the risk assessment process with transparency over-identified cyber risks and even insights on how to remediate them.
More than bringing just speed, however, insurance agencies should focus on the value of clarity, simplicity and relevancy when AI automatically matches the variety of cyber risks faced by an organization in a specific class of business to a set of coverages, limits and sub-limits for the selected coverages. This level of automated coverage and policy customization brings immediate coverage relevancy to policyholders, while agents and brokers can further personalize quotes to their client’s risk profile and risk appetite. This also directly prevents potential gaps or oversight in coverages.
The pandemic’s upside
The tremendous disruption brought on by the COVID-19 pandemic has ushered in an era of opportunity for cyber insurance professionals. Despite the increase in program choices, agencies must continue to carefully vet insurance program providers and choose those that go above and beyond to provide services that help policyholders stay safe, including cyber risk management, risk remediation and cyber awareness training.
Agencies should remember to seek insurance providers that resonate with the values of clarity, simplicity and relevancy in their processes, policies and coverage. An alignment with these principles means more educated policyholders, stronger agency-client relationships, and truly transparent partnerships across the insurance ecosystem.
Although the disruption caused by the pandemic hasn’t been easy on the insurance industry, cyber insurance professionals must be ready to adapt and willing to move forward with offering new insurance options that truly tackle cyber risks.
Jack Kudale (jack@cowbellcyber.ai) is the founder of Cowbell Cyber, a monoline cyber insurance provider that aims to close insurability gaps for all businesses. Jack brings 25 years of enterprise software experience, having led three venture-backed Silicon Valley cybersecurity and data analytics startups after a long stint as an executive in charge of distribution at a Fortune 500 software company.
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