This IDC Financial Insights Perspective focuses on the rising demand for cyber insurance and the factors that hold back insurers worldwide from exploiting the huge opportunity that this market offers. Based on our analysis, we understand that a holistic solution approach encompassing risk assessment, product innovation, underwriting, and claims management that can improve insurers' confidence to write more cyber insurance business is yet to emerge. However, there are certain tools and models that they can explore to help them further penetrate this market while also balancing their risk portfolios.
There are not many specialized tools in the market yet that are proven and standardized and can aid insurers in their cyber risk underwriting process. There have been some positive developments, however:
- Based in Newark, California, RMS released its Cyber Accumulation Management System, developed with a consortium of cyber insurers in collaboration with the Cambridge Centre of Risk Studies, this year. This includes a new software system and framework for cyber exposure reporting, in addition to a suite of cyber catastrophe scenarios for loss modeling.
- BitSight Technologies launched a web-based product called BitSight Security Rating Platform for cyber insurance in 2014. The tool provides objective, data-driven daily ratings for a company's security performance which will help insurers look at historical data, compare a company's security rating against industry peers, and make informed underwriting decisions. It will also help weed out underperforming applicants and aid underwriters to write a low-risk, high-yield book of business. The platform also offers security alert features for the insured, among other things.
- Oceanwide, an Insurity company, launched a web-based cyber risk assessment tool designed to help insurers identify and mitigate policy holders' specific risks to data and privacy. According to Oceanwide, the web-based solution launched in 2015 can be customized to accommodate country-specific regulatory standards and language requirements to make it easier for insurers to improve cybersecurity posture in real time.
- QuadMetrics released a product called Signet Profile, which is a highly scalable cloud-based platform that gathers and analyzes massive volumes of individual cyber risk data. In addition, it has a comprehensive collection of cyber risk information on the market and brings in quantifiable predictive assessment to cyber insurance risk analysis and third-party vendor evaluation.
- Willis Re, the reinsurance division of Willis Group Holdings plc, the global risk advisor, insurance and reinsurance broker introduced a risk modeling tool called PRISM-Re in 2015. This will enable insurers to quantify and manage their portfolio exposure to data breaches, the leading cause of cyber losses.
- Hyperion's broking arm Howden collaborated with cyber insurance specialist Insurisx Inc. in 2015 to develop a cloud-based risk assessment tool driven by data analytics, which will create innovative actuarial and underwriting formulas based on cyber intelligence feeds.