Cyber insurance is every bit as important as other lines of insurance. Organizations purchase it to protect themselves against significant financial losses in the event of a security breach. But right now, cyber insurance underwriting is suffering from a noticeable lack of maturity. Could threat intelligence help it grow up?
A lack of industry standards is one of the main hindrances to cyber insurance underwriting maturity. Carriers don’t know what to cover. They do not know how to effectively assess risks. And until they figure it out, cyber insurance will be nowhere near other lines of insurance and terms of underwriting maturity.
A Divergence of Coverage Options
A recent Insurance Business article featuring Google Cloud’s head of business risk and insurance, Monica Skokari, describes the current state of cyber insurance as a “divergence in coverage across different carriers.” For this reason, Skokari considers the industry immature. It is hard to argue against her.
It’s also clear that industry immaturity makes things difficult for buyers and brokers alike. How can buyers be sure that they are getting their money’s worth when they purchase cyber insurance? Likewise, how can brokers know they are offering the best coverage options to customers?
Enter Threat Intelligence
Introducing threat intelligence to cyber insurance underwriting would be a game changer. Why? Let us start with a basic definition of threat intelligence itself.
DarkOwl describes threat intelligence as the practice of monitoring and analyzing dark web activity in order to better understand the threats an organization faces. The dark web is where so many security threats are planned. It is the home of both emerging threats and older threats being modified for increased sophistication.
Applications to Cyber Insurance Underwriting
With a basic understanding of what threat intelligence is, let’s make application to cyber insurance underwriting. Comprehensive threat intelligence applied in the right way enhances an underwriter’s risk assessment capabilities. This plays out in:
- Better exposure insights
- A better understanding of the threat landscape
- Improved vulnerability management
Improving risk assessment capabilities leads to underwriters making better decisions. They make better decisions about coverage. They are able to do more with customization. They can apply risk differentiation more accurately, based on each buyer’s circumstances.
Managing Risk Proactively
Insurance, regardless of specific industries, is a risk-based business. Risk is everything in insurance. So in the cyber realm, underwriters really need the ability to manage their risks proactively. Threat intelligence makes it possible.
Threat intelligence offers an early warning system that alerts insurers to potential trouble. A provider can intervene to help mitigate the damage. It also encourages underwriters to work with clients by providing fresh exposure data they can do something with.
When claims are made, threat intelligence and data can enhance the process. Solid data dives deeply into the nature and scope of an attack. It contributes to more effective incident management. Threat intelligence can even help uncover fraudulent claims.
Better Policies and Pricing
The end result of incorporating threat intelligence into cyber insurance underwriting should be better policies and pricing. Interestingly, both are signs that a particular line of insurance is maturing. Cyber insurance could certainly use a bit of maturity these days. But in fairness to carriers, insuring against cyber-attacks is still relatively new. It is going to take time to iron things out.
In the meantime, threat intelligence providers are helping organizations better protect themselves against threats. This is good news for the insurance industry. When organizations practice better security, they are less likely to be subject to costly breaches. Carriers ultimately spend less money reimbursing recovery expenses. Everybody wins while insurance underwriting gradually matures.
