Drive cyber portfolio sustainability with scalable risk engineering and enhanced data insights

Whether you think of cyber as an exciting opportunity or a daunting challenge, it is clear at this point that the risk is relevant to every insurer. As more of life and business moves online, more premium will move to cyber policies and more cyber risk will invade other lines. In short, every underwriting organisation needs to find a sustainable way to manage cyber risk.

That task has been made no easier with the explosion of cybercrime in recent years. The majority of businesses lack the basic risk management capabilities to fight back, making the success of cyber attackers a matter of not if, but when. Against this backdrop, what is the path to developing a sustainable environment for risk assessment, data analysis, and underwriting profit?

During a session at Underwriting Innovation USA on November 12, Xing Xin, co-founder and chief executive officer of Paladin, will be discussing with Meghan Hannes, cyber technology E&O product head of Hiscox USA, the right tools that can turn this challenge into the insurance industry’s greatest opportunity.

He spoke to Intelligent Insurer ahead of the event.

Why do some insurers view cyber insurance with trepidation?

If you think about where loss ratios have been over the last couple of years, it’s not been a fun time and there have been some articles questioning whether cyber insurance can be sustainable in its current format.

Exposure is constantly changing and hard to measure with traditional underwriting strategies that miss relevant datapoints and refer only to a snapshot in time. Any time you see prices jump at multiple points in a single year, you know there must be missing factors.

How can this be made more sustainable?

The vulnerability to cyber attack for organisations of all sizes has grown bigger and that makes cyber resilience more complicated for everyone . A sustainable cyber insurance market will depend on the ability of companies to more effectively protect themselves against evolving threats.

That’s a huge challenge, but it’s exciting to think about the potential impact insurers could have. After all, raising the standard of risk management has been one of the insurance industry’s great contributions to society. For example, insurers drove the adoption of seatbelts because they decreased the cost of risk and drove better outcomes for all stakeholders.

We’re in that similar fundamental stage now. Insurers who are the largest aggregators of cyber risk have a unique opportunity to transform cyber risk. They can lead the way in redefining the level of cyber risk management maturity that is not just possible, but expected, for organisations of all sizes.

Is this impacting how policies are written?

We’re moving from underwriters using an application to make an assessment at a single point in time to potentially changing their view throughout the policy period. You need to continuously assess the company.

It’s about getting more and better datapoints to see how the company is changing over time, continuously updating your model and supporting consistent decision-making at every stage of underwriting.

This aligns with how you help transform a company’s risk profile. By helping insureds prioritise action on issues highly correlated with loss and reducing friction required to mitigate, you can minimise exposure throughout the policy period and build enduring improvements in cyber hygiene and resilience.

What can attendees expect to hear from you at Underwriting Innovation USA?

Attendees will learn how a leading insurer is succeeding in creating a long-term sustainable underwriting practice that best manages exposure against evolving threats. They’ll get insights into driving proactive high-impact risk mitigation actions from insureds through scalable risk engineering.

Attendees will also learn how these same efforts generate novel actionable datapoints and risk insights. Some of these ideas are not necessarily new solutions, but were previously impractical for insurers.

What do you hope attendees will take away from this session?

The first is they can develop an approach to engineering risk out of your portfolio through a process of continuous optimisation. It is absolutely possible to drive action from your insureds to help them shift their risk curve.

Another is how you build a longer-term data advantage, especially for carriers with existing books of cyber business in their portfolio. One area you want to consider is how to access behind the firewall data because that provides a much more expanded insight into exposure .

Finally, we’ll touch on maximising the actionability of data and creating the right feedback loop to incorporate data insights into underwriting strategy.

Xing Xin, co-founder and chief executive officer of Paladin, will be revealing how companies need to improve their cyber resilience and what carriers can do to stimulate this in order to build a sustainable cyber portfolio, at his 12:35pm EST session at Underwriting Innovation USA on November 12.

This is the biggest online event tailored specifically to underwriting—don’t miss out. Register now!