Fast, accurate pricing for cyber security insurance
In this white paper, Northdoor explains how automated connections in the extended supply chain make it difficult for underwriters to price and monitor the risk for cyber security insurance policies. Particularly for SMB customers, cyber security underwriters need to be able to assess and price risk faster, more accurately and at lower cost. They then need the ability to monitor that cyber risk as it changes over time.
In the digital economy, automated connections with partners and customers reduce friction and costs, but also raise the potential for cyber crime. With the annual cost of cyber crime estimated at $400 billion, insurers are seeing rapid growth in demand for cyber insurance policies. However, they face significant challenges in pricing and monitoring risk.
The need for speed
In a highly competitive market in which SMBs constitute 90% of first-time buyers, the need to price policies at high speed is challenging for insurers, given the difficulty in sourcing reliable information from these clients.
Currently, 30% of brokers report inconsistency in pricing, and 75% of brokers and underwriters believe that client organisations lack a clear view of their own exposure – such that the aggregated exposure for the insurers is even harder to measure.
To address the challenge, forward-thinking underwriters are replacing manual risk-assessment processes and questionnaires with smarter automated approaches to get better and faster risk insight at the point of pricing or renewal of policies.
Moving to a technology-led approach will help not only in the initial pricing process, but also in the ongoing management of risk for both the insurer and the policyholder. Prevention is always better than cure, and the ability for both parties to maintain a dynamic view of their exposure will pay huge dividends in terms of avoiding the need for claims.
By investing in a solution that constantly measures the security maturity level of policyholders, encompassing also the multi-dimensional risk across their supply chains, cyber security insurers can significantly improve their assessment of aggregate portfolio risk.
In addition to helping underwriters provide rapid, accurate and consistent pricing quotations – particularly valuable in securing SMB business – detailed ongoing risk assessments allow insurers to build closer relationships with policyholders rather than only being in contact at renewal time.