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Undoubtedly, cybersecurity — and the management of risk — is top of mind for most business leaders today.
Consider that nearly 75% of organizations experience at least one cyberattack — and the average cost of a data breach is $4.35 million.
And, experts say, this makes cyber insurance all the more imperative.
“Cyber risk is a business risk, so cyber insurance is a must-have for organizations,” write Forrester’s Heidi Shey and Alla Valente.
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Given all this, cyber risk management is one of the greatest growth opportunities for the insurance sector right now, said Pascal Millaire, CEO of cyber risk analytics platform CyberCube.
And, he said, “a key to unlocking this potential is the development of robust analytics tools to assist risk decision-making.”
To help further its capabilities in this area, CyberCube today announced $50 million in additional growth capital, bringing its total raised to more than $100 million.
Increased risk, opportunity in cyber insurance market
The cyber insurance market size is projected to grow from $12.8 billion in 2022 to $63.6 billion by 2029, registering a compound annual growth rate (CAGR) of 25.7%. According to Fortune Business Insights, the market exhibited more than 22% growth in 2020 compared to 2021.
Along with this growth, premiums are only getting higher, and significantly so: The Association of Insurance Commissioners reports that cyber insurance premiums collected by the largest U.S. insurance carriers in 2021 increased by 92% year-over-year.
“Cyber risk presents the greatest opportunity property and casualty (P&C) insurers have had in over a century,” said Millaire. “In a world with billions of internet of things (IoT) devices, the explosion of data and automation of industries, cyber risk will reshape risk, the economy and society, and therefore the entire P&C insurance industry.”
At the same time, says CyberCube cofounder and chief product officer Ashwin Kashyap, “policyholders can improve their risk posture rather quickly and react to unfolding events by taking actions that can dramatically reduce the overall risk they present to an insurer.”
Cyberhygiene practices that insurers are likely to require, said Kashyap, include firm-wide implementation of multifactor authentication (MFA) and disabling remote desktop services or having controls that require multiple levels of approval.
Quantifying cyber risk
CyberCube competes in its market with AIR Worldwide, SecondSight, At-Bay, SecurityScorecard, BitSight and RedSeal, among others.
The company’s cloud-based platform helps insurance organizations quantify cyber risk to facilitate placing insurance, evaluate individual commercial risks during the underwriting process and manage cyber risk aggregation, said Millaire.
“We quantify cyber risk to create actionable insights for insurance companies,” he said. “We turn cyber risk into dollars and cents, so that organizations can make value-based decisions on how to manage, mitigate or transfer risk.”
The technology’s enterprise intelligence layer provides insights on millions of companies globally and includes modeling on thousands of points of technology failure, he said. This allows insurers and brokers to understand portfolio exposure to cyberthreats and enable their clients to better protect themselves.
The company’s SaaS products include:
- Broking manager, for brokers to better advise their clients on risk transfer.
- Portfolio manager, a scenario-based catastrophe model that empowers portfolio-level insights for senior leadership decision-making.
- Account manager, giving insurance underwriters a unique view of each risk they assess with actionable insights.
- CyberConnect, which integrates analytics through application programming interfaces (APIs), integrating into existing workflows.
Holistic cyber insurance management
Today’s funding round brings the company’s total raised to more than $100 million. It will support development of CyberCube’s cyber risk quantification products while accelerating go-to-market expansion in the global insurance, reinsurance and broking industry.
The funding came from investment funds managed by Morgan Stanley Tactical Value (Morgan Stanley), with continued participation from existing investors Forgepoint Capital, Hudson Structured Capital Management (Bermuda) Ltd., MTech Capital, and key investors from Stone Point Capital. Scott G. Stephenson, former chairman, president and CEO of Verisk, also participated in the financing and will join the CyberCube board as a director.
Throughout 2022, CyberCube has also announced several strategic partnerships, including with Relm Insurance, Elpha Secure, Kapnick, Relay and EXL, said Millaire.
“The transfer of cyber risk to the insurance markets is fast becoming ubiquitous and vital for holistic risk management across sectors,” said Don Dixon, cofounder and managing director at Forgepoint and chairman of the CyberCube board.
Michael Millette, cofounder and managing partner at HSCM Bermuda and CyberCube board member, agreed: “The quantification of cyber risk through robust modeling will allow industry participants to predict risk levels and provide useful pricing information.”
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