I am sure you have been following the news that the Colonial Pipeline was damaged by a cyberattack on May 7, resulting in the closure of the pipeline that supplies about 45% of all refined fuels along the US East Coast between Texas and New York. Did you know that Atlanta’s Hartsfield Airport is served by this pipeline? There have been numerous reports in the news that gas stations have already started running out of gas. Have you begun to model your potential exposure to business disruptions as a result of this disaster?
Are you really ready for cyber threats?
A few years ago, I spoke to an Insurance executive about cyber claims. He asked me what I thought was the biggest claim of the year. I said the Equifax breach. His answer, a commercial bakery in Germany, was their biggest single claim. He explained that all their ovens were computer-controlled and the company had suffered a similar breach to Colonial, and they had been down for almost a month.
Are your insureds properly covered for their potential cyber exposures? Do they believe they have coverage that in fact they might not? Are you providing them access to the tools necessary to identify and mitigate potential cyber vulnerabilities? These and other questions are critical for you to retain your trusted advisor relationship with your insureds and their brokers.
VC interest is very high. A sample from Sonr of around 40 funded organizations shows more than $2.3B has gone into these companies
In general, there are 2 primary buckets of cyber insurance-related investment activity that investors have deemed matters.
Insurtechs developing Cyber policies and potentially offering detection or mitigation services.
|Coalition||$315,000,000||Provides cyber insurance products covering a range of liabilities for SMEs. Includes detection.|
|Corvus Insurance||$145,800,033||An insurtech offering smart policies covering cyber and other risks.|
|Stroz Friedberg||$115,000,000||A consulting firm bought by AON that provides solutions for companies to manage digital risks.|
|At-Bay||$87,000,000||A cyber insurtech that provides risk assessment, incident management and insurance products to brokers and their customers.|
|Cowbell||$23,600,000||An insurtech powered by artificial intelligence, which aims to simplify cyber insurance for SMEs.|
Companies developing systems to detect and prevent cyberattacks
|BioCatch||$213,650,000||A cybersecurity company that provides behavioral biometric data and analyzes human-device interactions to protect users and data.|
|Shape Security||$183,000,000||Shape protects web and mobile applications from cyber threats and more for the world’s largest companies.|
|BitSight||$151,000,000||A platform that evaluates the effectiveness of the security of companies on a daily basis using a data-driven, external approach.|
|Kenna Security||$98,250,000||A Risk Intelligence & Vulnerability platform that leverages advanced data science to predict and prevent IT attacks for organizations.|
|ThreatQuotient||$87,560,000||ThreatQuotient provides a threat intelligence platform that centrally manages and correlates unlimited external sources.|
What does this mean for you and your insured?
Given the increase in reported cyberattacks that we are seeing everywhere, you have to ask yourself the following question:
- Have we looked at the potential risks to our policyholders from the shutdown of the colonial pipeline? Have we proactively reached out to potentially affected companies? Like the local gas station!
- Is the insurance cover we offer to our insured enough?
- Would our clients and/or brokers believe that we would cover certain claims if we could not? Do we need to be proactive towards them?
- Does our product offer what our customers need and will demand?
- Do we need to find another partner? Would some of these newer Insurtech providers have a stronger product for our customers?
- Are there segments of our customer base where there are particularly strong potential vulnerabilities?
Deloitte published a study in the summer of 2019 which found that 15% of US middle-market companies, 15% had no cyber coverage at all. These companies are now a market bonanza! In addition, 30% had standard policy coverage, but no stand-alone cyber policy. This means that almost half of the market could be approached with a very valuable offering – to strengthen their risk positions. And this only for middle-market companies. Think how much greater the opportunities are for SMEs and private customers.
I look forward to continuing the dialogue!
Insurtech Advisors helps regional carriers and agencies to work with the best Insurtechs that will enable you to succeed and continue to meet the needs of your members, employees, and independent agents. We know your business and the landscape of Insurtech. We save you countless hours of wasted time and false starts. Furthermore, we work closely with your team to identify opportunities and goals, then introduce you personally and to the best Insurtechs pilot.
Kaenan is a professional in the areas of block chain, telematics, wearables, analytics, artificial intelligence (AI) and Insurtech. He has played a key role in innovating many start-ups and established carriers. His advice has been widely appreciated in the financial community, which resulted in multiple quotes and publications in various media.
Most recently he was Practice Lead for Innovation, Fintech, and Strategic Insights at EY. Throughout his career he has held leading roles within Marketing Strategy and Decision Management with top Insurance, Banking and Finance companies, including USAA, Citibank and Sallie Mae.