Insurtechs and insurance companies are “breaking down the wall” that separated them as competitors in favor of collaborating to tackle dynamic cyber risk.
“We’re all trying to solve the same problem,” said Lori Bailey, director of insurance at Corvus Insurance, during a panel discussion at Carrier Management’s InsurTech Summit. “We are in the same boat.”
“I think there’s this long-standing perception that insurtechs and insurers are in some ways in competition with each other,” she said. “I see it differently. Insurtechs can be a real enabler by providing a lot of important data that traditional operators simply don’t have the capacity to provide. Not because they don’t want to, but because the systems do not allow them to capture this data in a real-time format and be able to use it as part of the underwriting process.
Roman Itskovich, co-founder and chief risk officer at managing general agent At-Bay, told the roundtable he doesn’t like the term “disruptive” for the insurtech space.
“At the end of the day, it’s a partnership,” he said. “But I think change is difficult and some things have to change.”
Right now, the broader cyberinsurance market is taking “less of an underwriting approach and more of an exclusion approach,” Itskovich said.
He said insurtechs have tried to efficiently collect data – information that can be validated by loss trends to understand “how we can write risk consistently without creating ambiguity for our policyholders”. This is done, he added, with an active risk management approach to maintain data collection throughout the policy period instead of a traditional once-a-year underwriting process.
“The mindset of insurtechs and carriers should move away from a once-a-year underwriting snapshot and decision, to a more dynamic approach,” Itsovich said. “If you take an active risk management approach where you systematically collect information and try to help companies stay safe, not just through the insurance mechanism, but through a mechanism risk management – I think this is something we will all benefit from, both policyholders and carriers.
Bailey said insurtechs have played a “really important role” with reinsurers in helping to understand data aggregation and systemic risk to free up capacity.
“We think insurtechs can deliver a lot of rich data in this particular space,” she said. “Not just data but tools to help reinsurers better manage risk.”
Bailey said she expects the increase in partnerships between traditional cyber insurers and insurtechs to continue.
Bill Keogh, COO and operating partner of Eos Venture Partners, said “the days of simply offering cyber products on a standalone basis without technology packaging are fading given the risk environment “. A technology company partnering with insurance companies to help deliver the capability for a technology product is “a very powerful tool,” coupled with other technology providers on the response side.
“It’s more of a disruption of the old ways than an industry disruption that we all like to put in the news because it sounds good,” Itskovich said. “It sounds aggressive but that’s not the reality of this space in my opinion.
“Insurers have the reputation and the capital, and the technology companies have the software and some talent that is more difficult for insurance companies to obtain. It makes sense.
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