Cyber is a growing new growth area that has the potential to deliver compelling insurance especially within the market. However, the path to becoming a market-leading and profitable cyber insurer is fraught with challenges. In this article, we outline key strategies for developing a high-quality online offering, leading to a 7-step guide to online strategies for the Underwriting Executive.
Why the cyber mid-market has unique challenges to mitigate
The cyber risk landscape is evolving so rapidly that insurers need a robust framework to for example enable ongoing data reading from previous claims, deliver a seamless measurement and aggregation process, and reduce unintended risk aggregation.
While the SME market will often buy standard internet coverage directly and online, the mid-market consists of companies served by brokers and agents. These companies require insurers to have both basic and advanced skills to successfully address the unique challenges of cyber risk in the marketplace. The key challenges that are unique to the internet within the market are the following:
Transparency and transparency for sellers and agents: Since the middle market is largely served by brokers and agents, it is important that the insurer's risk appetite and underwriting process be transparent. Whether the insurance offers a dedicated cyber broker portal or uses existing portals in many lines of business, the key is to have a clear appetite for risk and make it seamless for consumers to compare quotes and place a business. Additionally, it is important to turn in accurate quotes on the same day.
The need for both general and specific policies: The middle market consists of companies that buy general and standard policies. Therefore, insurers need to be able to quickly adapt to changes in policy terms, changes in exclusions, or a different mix of higher deductibles or lower limits. Some mid-market companies have complex needs for risk mitigation, prevention and incident response planning. For large mid-market clients there may be a need for in-depth exposure analysis to design the right insurance coverage.
Important data values: While no more than four data points are required for an SME customer with a standard online policy (name, industry, revenue, and customer website), more data points are required for mid-market customers. Some data points can be obtained through open APIs and structured data capture from vendors, but the higher the complexity of the risk, the more likely the relevant data points will end up in unstructured documents.
Establishing a robust digital infrastructure for cyber insurance
Cyber insurers need basic skills in all distribution, quoting, and underwriting to ensure a smooth business process. The operating model begins and ends with a focus on the customer and the merchant experience. Whether insurers choose to organize themselves by customer segment (eg middle market Institution of Excellence in serving all lines of business) or by line of business (eg a dedicated online one-stop shop team that cuts through distribution, underwriting, and claims), it's important that this be a conscious choice made at the C- level.
All customers, regardless of whether they purchase cyber insurance, should assess their cyber risk and define their primary cyber risk scenarios as part of incident response planning. If they don't, they run an unknown and potentially dangerous risk in the balance. Some insurers may choose to invest in risk scenario capabilities, while others will rely on brokers or outsource to cyber security experts. The skills required for in-depth exposure analysis are similar to what other insurers offer in a cyber security environment that provides a secure environment for pre-incident advice and training, cyber stress testing, cybersecurity preparedness tools, detection and incident response solutions. response planning, notification services and embedded claims services.
Basic basic power in cyber a a strong digital backbone and master data management fit for purpose. Insurers need key tools such as robust digital and fit-for-purpose master data management to perform detailed exposure analysis at the quoting stage. These tools facilitate risk aggregation and establish a framework for measuring and understanding aggregated cyber risk exposure based on a variety of parameters, including industry sector, underlying hardware and software, cybersecurity maturity, supply chains, capabilities, and company size. A detailed exposure control framework is essential to effectively reduce the risk of unintended risk aggregation.
Building market-leading cyber capabilities
An important part of becoming a market-leading internet insurer is that the technology and data capabilities must be built to operate at scale and in real time. Cyber insurance is among the most challenging sectors due to the nature of breaches that can be catastrophic and limitless. Cyber incidents can be dynamic and unpredictable, similar to oil spills, and can have a negative impact on businesses, communities, and critical infrastructure such as hospitals, water and sanitation systems, and airports. Today, the potential for insurers to face unintended risk accumulation is a clear and present threat.
As mentioned above, more data points need to be captured and modeled in the measurement and binding category of internet policies in the middle of the market. In addition, for the first notification of loss, there may be hundreds of relevant data points, much more than for example for a car claim, where insurers usually capture 20-30 data points specific to the car (vehicle details, purpose of use), witness details, IoT data etc. .). With an online claim there are more than 100 data points that can be valuable for continuous learning and improvement that goes into it. exposure management, actuarial tables, and risk controls in the underwriting system. This is what enables the market leading insurer to continue to make a profit with a strong framework in terms of risk appetite and pricing.
As previously covered, there is a shortage of cyber talent with deep knowledge of cybersecurity policies and a deep understanding of the ever-changing laws and regulations across IT, AI, GDPR, and consumer privacy. While investing in talent and continuing to develop underwriters and claim adjusters, there are high-impact use cases in online insurance for AI and Gen AI solutions. We've seen AI and Gen AI save underwriters tens of hours a month and empower them to spend their time alone niche and dangerous areas that require deep human expertise.
Insurers with a strong digital core can move quickly to accelerate profitable growth in cyber, but many insurers are coming up short on the investment required to use AI and Gen AI at scale. According to Accenture'sA study of the Pulse of Change46% of insurance C-suite leaders say it will take more than 6 months to scale up Gen AI technology and take advantage of the potential benefits. If applications and data are not in the cloud, and if there is no strong layer of security, then benefiting from Gen AI at scale is almost impossible.
7 Step Online Strategies for a Great Underwriter
In today's rapidly evolving technology environment, Senior Underwriters are faced with the important task of guiding their organizations through the complexities of cyber insurance. The following strategic steps are a road map for insurers to not only survive, but thrive in this challenging environment:
- Define your identity in online insurance: Decide if you want to be a conservative insurer, a fast follower, or a market leader. This choice will guide your investment and emphasize cyber as a core part of your business.
- Create your cyber type: Determine your signature offering in online insurance, whether it's best risk consulting, competitive pricing, AI-powered and streamlined processes, or a solid reputation for claims service.
- Choose to do a special: Choose between establishing a market-centric Center of Excellence (CoE), a Cyber-specific CoE, or a hybrid operating model.
- Improve response: Change or use new skills to deliver accurate quotes within hours.
- Improve underwriting processes: Determine the total amount of the underwriting variance for technical pricing. Reverse your processes to capture important data in the vendor submission and claim notification stages.
- Explore online exposure management: Contact external experts to assess your cyber exposure management to help avoid unintended risk accumulation.
- Invest in talent: Focus on a talent strategy that develops skills and integrates advanced technologies such as AI and Gen AI to keep pace with the evolving cyber risk landscape.
Measuring how to become an internet market leader
Designing and implementing an effective cyber insurance framework presents significant challenges. A key element includes defining success, establishing measurement metrics, and determining the actions needed to achieve these goals. Continuous monitoring of financial and operational metrics is essential for timely corrections, to ensure the availability of profitable growth in the Internet middle market. For further discussion, please get in touch Carmina Lees again Matthew Madsen.
Source link
