19/Jun/2019
In her previous blog piece, Silvi Wompa Sinclair, Insurance Business Director, CyNation looked at the burning issues facing the insurance industry, given the rise and rise of cyber security breaches. In this latest blog she examines the challenges – current and future – that the industry must address.
As Silvi (right) explains: “the main challenge – and this is more about the risk transfer industry today – is how are insurance companies able to calculate the kind of risk they are dealing with? This reflects on the industry in general having a traditionalist approach, in terms of risk analysis, risk assessment and risk pricing. In the area we see in London, with Lloyds, it can be down to a single person to say ‘what have I observed and experienced over the past 30 years? And what data can you give me here and now?’ Which makes it quite clunky and very narrow in its outlook.
“The big challenge for this market as a whole will be analysing data, accessing data and proactively analysing data about the risks.
“A single company applying for a cyber insurance policy today will typically be faced with a 20 page paper application form asking them a multitude of questions about security policies, ISO certification, related policies and the procedures the applicant company has in place. But this is not looking at the real world and what is going on in real life within this company.
“The tendency is that they will only get a once a year paper-based assessment, and this is meant to cover what is a tremendously dynamic risk area. That is how a price is set. To my mind this is very dangerous.
The 2029 position
“Ten years from now I would like to see underwriters being more like data scientists, who are accessing large swathes of data, so that when a single client comes to apply for a policy, they won’t just be looking at that client. Instead, they will be looking at all the data that is available. This will enable them to ask: ‘what is it about this client that is similar to what I have seen elsewhere? And what do I know now but what can I also predict might happen to this particular company?’ This is all so that they can make a much more informed decision about their exposure, about what should be their cover and what should be their price.”
Silvi’s previous blog piece is available via the link.
