InsurTechs and insurance companies are “breaking down the wall” that stood between them as competitors in favor of working together to tackle dynamic cyber risk.
“We’re all trying to solve the same problem,” said Lori Bailey, chief insurance officer at Corvus Insurance, during a panel discussion at Carrier Management’s InsurTech Summit. “We’re in this together.”
“I think there’s this long-standing perception that InsurTechs and insurers in some ways have been in competition with one another,” she said. “I view it differently. InsurTechs can be a real enabler in providing a lot of important data traditional carriers just don’t have the ability to provide. Not because they don’t want to, but because the systems don’t allow them to capture that data in a real-time format and be able to utilize that data as part of the underwriting process.”
Roman Itskovich, co-founder and chief risk officer at managing general agent At-Bay, said during the panel discussion that he does not like the term “disrupter” for the InsurTech space.
“At the end of the day, it’s a partnership,” he said. “But I think change is hard, and some things need to change.”
Right now, the wider cyber insurance market is taking “less of an underwriting approach and more of an exclusionary approach,” Itskovich said.
He said InsurTechs have tried to efficiently collect data—information that can be validated through loss trends to understand “how we can write the risk in a consistent manner without creating ambiguity for our insureds.” 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 for InsurTechs and carriers should be moving away from a once-a-year underwriting snapshot and a decision to a more dynamic approach,” Itsovich said. “If you take an active risk management approach where you consistently collect information and you try to help companies stay safe, not just through the insurance mechanism but through a risk-management mechanism, I think that is something we will all benefit from, both insured and carriers.”
Bailey said InsurTechs have played a “really important role” with reinsurers in helping get an understanding of data aggregation and systemic risk to free up capacity.
“We think that InsurTechs can provide a lot of rich data in this particular space,” she said. “Not only data but tools to help reinsurers better manage the risks.”
Bailey said she expects the rise in partnerships between traditional cyber insurers and InsurTechs to continue.
Bill Keogh, COO and operating partner with Eos Venture Partners, said the “days of just offering cyber products on a standalone basis without a tech wrapper is fading given the risk environment.” A tech company partnering with insurance carriers to help provide capacity for a tech-enabled product is “a very powerful tool,” coupled with other tech providers on the response side.
“It’s more of a disruption of old ways of doing things rather than the industry disruption that we all like to put in the news because it sounds great,” 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 technology companies have the software and some talent that is harder to get for insurance companies. That just makes sense.”