The cyber insurance ecosystem

Jonathan Spry, Envelop Risk

Cyber risks are becoming more prevalent, high profile and financially damaging; they constitute a defining challenge of our age. The market for cyber-insurance is growing but remains in disequilibrium – demand is outstripping supply. The nature of insurance solutions available contain strict monetary limits, well below potential economic exposure, as well as carve-outs and exceptions for certain types of loss. The primary barrier to industry growth is accurate risk assessments to expand coverage at appropriate pricing.

With unique insight into cyber risk driven by a proprietary, artificial intelligence-based simulation model, Envelop Risk provides customers with greater economic value through more-accurate policy and portfolio pricing with increased access to capital markets, while reducing overall risk exposure.
Envelop Risk is an enabler in a complex eco-system, finding niches where risk pricing is required to overcome the discontinuities in everything from cyber insurance for small companies, to Insurance Linked Securities (ILS) and large scale ‘silent-cyber’ reinsurance. Envelop Risk’s augmented intelligence approach to underwriting provides the catalyst for an efficient market of risk transfer to develop.

The evolution of cyber analytics technology and its role in the insurance eco-system is key to market development. Currently, no dominant design exists for cyber-analytics or for cyber-insurance policy scope; cover for regulatory fines and reputational risk is uncommon or completely unavailable, despite the obvious rationale to insure. Anomalies are present in the market and hurdles to insurance emerge due to a lack of transparency and fit-for-purpose product to match emerging demand. For the insurance market to move from an innovation/tech-transfer stage to commercialisation, system-building and technology consensus is required.

Cyber-insurance innovation, in common with the application of many breakthroughs in technology, will require advances in complementary industries- particularly Endpoint Detection and Response (EDR)- in order to become commercially viable, and only with assessment of the whole eco-system can decisions concerning appropriate commercial risk retention be taken.

Envelop Risk adopts a partnership approach to system building with cyber-security experts and with major insurers, reinsurers and investors. Through such partnerships, Envelop will become a powerful force for good, enabling client matched needs to be addressed and cyber risk to be transferred to those best placed to manage it.

The risks in technology are real, software is never going to be perfect, but the risks of retreating from technology are far greater. Envelop Risk allows consumers and corporates alike, the ability to protect wealth and our way of life in the digital economy.

Progress is Secured.