Inside-Out Underwriting: The Future of Cyber Insurance?

Inside-Out Underwriting: The Future of Cyber Insurance?

The insurance industry has been developing and changing for years, and with the help of technology, traditional insurance has become more efficient, providing better ratings, premiums, and coverages. Cyber insurance was once simple and easy because claims were low, and companies could insure even large online businesses without fear of losses. However, everything changed in 2020 when the pandemic hit, and companies worldwide experienced various cyber attacks. Ransomware attacks increased, and many businesses found themselves locked out of their websites, which prompted the need for a new way to evaluate risk in the cyber insurance industry.

That’s where inside-out underwriting comes in. It’s a term that refers to evaluating a company from the inside as well as from an outside, third-party view, which can help businesses with strategic external investing as they have a deeper understanding of their most valuable assets. This evaluation method is essential, especially for cyber insurance, as it can more accurately evaluate a company’s exposure and price risk more accurately.

For many years, companies used the “outside-in” insurance model, which worked because the risks were different. For instance, property and casualty companies mostly looked at a person’s past accidents or occurrences to determine their risk. However, with the changing times, companies need to estimate severity more efficiently. Auto insurance companies have already embraced inside-out underwriting with a new universal standard that uses Bluetooth and telematics to observe and detect good and bad drivers. This method helps determine the risk of accidents or lack of high-risk behaviors. It’s time for cyber insurance companies to follow suit.

For homeowner’s insurance, most companies use a program that analyzes third-party data and creates a quote almost instantly. But for giant manufacturing plants, a more intense process is necessary to define the risk. For significant businesses, insurance companies send in engineers, appraisers, or risk evaluators to get a better picture of their risks right away. Cyber insurance companies need to do the same.

The cyber insurance industry has grown astronomically over the past few years, and there’s a need for a new strategy, as almost every cyber insurance company uses a form-style application that tells the underwriter very little information. If two companies are very similar, how does the underwriter know what the better or worse risk is realistically? That’s where SecondSight comes in. If insurance companies could properly identify a company’s digital risk, they could produce a fair and accurate quote for insuring them easily. SecondSight helps businesses by using CyberTelematics, which are programs that identify and calculate risk.

SecondSight is a game-changer for the cyber insurance industry, as it installs Risk Tracker within a company firewall to measure and evaluate their risk from the inside-out, which is why the term inside-out underwriting applies. While SecondSight’s products help insurance companies identify and measure risk, it also helps businesses themselves to understand where their risks lie. Knowing the risks and seeing where there might be holes in their software or their security is the key to improving and repairing it. Companies can take the time to make changes that will protect them more and help them avoid significant cyber attacks or other security issues.

The exciting thing about inside-out underwriting is that it may very well be the standard and accepted by the industry one day, just like it happened with auto insurance. Contact SecondSight today to have a clear picture of your business and its digital risk. Having your digital assets clearly defined and understanding what they mean can make a world of difference for any company.

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