Major cyber insurers form company to enhance risk mitigation
Seven leading cyber insurers have announced that they have formed a company to enhance cyber threat and risk mitigation efforts in response to a rising number of cyber threats and insurance claims.
Formed by AIG, AXIS, Beazley, Chubb, The Hartford, Liberty Mutual Insurance and Travelers, the new company, named CyberAcuView, aims to compile and analyse cyber-related data to enhance value and service to policyholders. It also plans to help insurers sustain a competitive cyber insurance market.
CyberAcuView’s activities will be “conducted under strict antitrust review and guidance”, with Mark Camillio, Head of Cyber, EMEA at AIG, being appointed as the company’s CEO.
How does CyberAcuView plan to monitor cyber risks?
According to the seven founders of the company, CyberAcuView will monitor and mitigate cyber risks in several ways. These include providing industry best-practices to improve resilience to cyber risk; proactively engaging with regulators, law enforcement, and other security agencies to counter cybercrime and the rapid rise of ransomware; developing systemic risk solutions and advancing cyber policy language to improve market efficiencies; and analysing cyber trends to provide enhanced visibility on cyberattacks and the causes of loss so that insurers can identify critical controls and educate policyholders on loss prevention strategies.
In addition to Camillo, the company’s CEO, other members joining the company include Monica Lindeen as Director of Regulatory Affairs, and FBI veteran and former Chief Operating Officer of the National Insurance Crime Bureau (NICB), James Schweitzer, who will become the company’s Director of Law Enforcement Engagement.
Commenting on the cybersecurity industry, Mark Camillo said: “The cyber landscape continues to evolve with coordinated attacks becoming more frequent and disruptive. Combining resources from across the insurance industry will allow us to better understand cyber trends, anticipate and potentially mitigate future attacks, and help improve overall cyber resilience”.
James Auden, Managing Director of the American credit rating Agency Fitch ratings, talked about U.S. insurers’ responses to a spike in cyber claims.“The cyber market faced a reckoning in 2020, as loss experience deteriorated, particularly from an influx of ransomware incidents. While cyber premium rates are rising sharply, concerns remain that underwriters can successfully price this business long term”.
To solve this, analysts at the U.S credit rating agency AM Best say that insurers “urgently need to reassess all aspects of their cyber risk, including their appetite, risk controls, modeling, stress testing, and pricing, to remain a viable long-term partner dealing with cyber risk”.
CB Insights: US Insurtechs Are Competing In A Global Market
In the first half of the year, insurtech companies around the world have raised US$7.4bn, nearly doubling their funding in Q2. According to Digital Insurance, insurtechs have raised US$4.8bn in Q2—an 89% increase in funding from Q1. But US firms are no longer the sole beneficiaries.
What Are the Stats?
Out of the 15 Q2 mega-rounds—those that top US$100mn—only eight included American firms. Pretty good, you might say. That’s over half! But US companies only made up 38% of the deals, which marks a 10% drop from Q1 and a 12% drop from 2020. Technically, therefore, US insurtechs are less influential than they’ve been in the past. But who says this is a bad development?
Despite my American citizenship, I’d argue that a more globally diverse insurance market is only for the best. Many of the world’s citizens who could most benefit from improved insurance services live outside of the States—and deserve local, tech-savvy services.
Why Does This Matter?
You’re always going to see the typical insurtech contenders from Western countries. For instance:
- German-based wefox: US$650mn Series C
- UK-based Bought By Many: US$350mn Series D
- US-based Collective Health: US$280mn Series F
But it’s critical that we address risk across the world. American insurtechs might be some of the most technologically skilled firms in the industry, but it’s not their first goal to address floods in Southeast Asia, crop destruction in China, and COVID complications in South Africa. That’s why we should celebrate that the recent Q2 round included insurtechs from 35 different countries.
According to CB Insights’ Q2 2021 Quarterly InsurTech Briefing, this was the first time that they’d observed insurtech activity in Botswana, Mali, Romania, Saudi Arabia, and Turkey. And ‘from a product, service, distribution, and underlying risk perspective, we—as a society and as an industry—are moving at an unprecedented speed’, says Dr. Andrew Johnston, Global Head of Willis Re InsurTech.
Just ask CB Insights. InsurTech value propositions have resonated with the world.