Our Wired World

The Evolution Of Cyber Insurance In 2021

Global cyber-attacks increased by nearly a third in the first half of 2021

A new report from Expert.ai, “How Cyber Insurance Has Evolved in 2021,” provides insurers with insight into unprecedented change and risk being driven by the pandemic, causing costs to soar and confusion to spread across the marketplace. Download the full report here.

BOSTON, Dec. 20, 2021 /PRNewswire/ — Expert.ai (EXAI:IM), the premier artificial intelligence (AI) platform for language understanding, today released a new Expert IQ Report, “How Cyber Insurance Has Evolved in 2021.” In the first half of 2021 alone, threat research shows global cyber-attacks climbed 29%, ransomware incidents jumped 93% and demands rose an astounding 518%.

Report findings are produced using expert.ai’s advanced natural language understanding (NLU) capabilities. The technology takes a unique approach to AI by combining symbolic human-like comprehension and machine learning (ML) to create practical applications that deliver real business impact and measurable benefits. With deep understanding of any kind of document (presentations, contracts, emails, claims, reports, posts, social media messages, etc.) it helps organizations turn unstructured language details into structured data at speed and scale. This augments discovery capabilities and streamlines the automation of complex, knowledge-centric processes.

The Expert IQ Report is a regular series that provides deep content analysis from massive amounts of language data on a given subject. For “How Cyber Insurance Has Evolved in 2021,” expert.ai analyzed a sample of approximately 1,130 articles, published in a range of insurance industry outlets between January 2021 and November 2021. Focused on insurance news, opinions and analysis, the analysis identified the cyber-related issues discussed most online, capturing the main topics, trends and sentiment expressed about them.

Defining the Market

Looking at the overall sentiment of articles correlated to the cyber insurance market value (more than 14% articles out of the 1,130 analyzed), cyber insurance is being discussed in a more slightly positive light than negative. However, this might seem a countertrend according to some industry analysts. According to market research firm Forrester, “Insurers have been collecting small premiums while facing near infinite risks. At least one top-10 cyber insurance carrier will cease writing new business and selectively run off existing business in 2022.”

Are Insurers Aware of Cyber Risks to Which They Are Exposed?

According to the sample analysis, more than 19% of articles show a correlation between cyber and the COVID-19 pandemic. This seems to prove that underwriters are struggling to evaluate the cyber exposure correlated to pandemic-generated vulnerabilities. In addition, 2.9% of cyber articles (205 articles out of the 1,130 analyzed by expert.ai) are related to silent cyber which refers to cyber risks that are neither explicitly covered nor excluded in policies.

In fact, unlike cyber insurance that clearly defines the parameters of cyber coverage, traditional policies such as property and casualty do not. The latter are those most likely to result in litigation or unintended exposure. If there is no explicit cyber exclusion in a policy, insurers may be liable to cover losses caused by cyber perils. The potential for aggregated loss from these underlying exposures is currently one of the major issues being considered by the insurance/reinsurance industry.

What makes policy review and comparison especially complex for cyber is that threats are evolving and growing...

Lloyd’s of London required all syndicates to provide clarity on the cyber exposure in all their policies, giving clients contract certainty. This approach started in 2020 and has been phased in over the course of 2021. It particularly aimed at eradicating silent cyber from traditional lines of insurance by encouraging insurers to identify the exposure and either clearly exclude or affirmatively include it. The same approach can be seen by regulators, including the European Insurance and Occupational Pensions Authority and the National Association of Insurance Commissioners in the United States, who have issued guidelines to help firms manage this risk.

Cyber insurance findings in the report include:

Products and impact: Cybersecurity and cyber risks were common themes with data clearly showing both a need for more suitable insurance products and the potential impact on existing contracts.

Insurers struggle with risk: A strong correlation between cyber threats and COVID-19 appears to show that underwriters are struggling to evaluate their exposure to pandemic-generated vulnerabilities.

Resilience and relevance: Cyber risks have been testing the ability of organizations to prepare for, respond to and recover from attacks. As a result, resiliency emerged as the main topic across 67% of cyber-related articles in the sample analyzed, proving the insurance sector is still relevant to global improvements in cyber resilience.

“What makes policy review and comparison especially complex for cyber is that threats are evolving and growing. Contracts may exceed 100 pages – it’s not easy to streamline the review process to avoid unintended risk exposure while ensuring coverage certainty,” said Pamela Negosanti, head of sector strategy for financial services and insurance at expert.ai. “With NLU, we augment underwriters by making policy reviews faster, more consistent and accurate. We help them overcome new challenges – like those posed by ‘silent cyber’ – by improving the reading, identification and extractions of critical information around explicit and implicit coverages.”

Keith C. Lincoln, expert.ai CMO, added: “The right AI approach can provide enterprises competitive advantage by automatically generating fast, accurate market understanding from existing business documents. You can identify emerging risks and trends, gain a detailed picture of sentiment, design more effective and profitable products, seize new opportunities and more. It’s insight today for decision-making that’ll shape your future and provide strategic advantage.”

 

 

 

About expert.ai
Expert.ai (EXAI: IM) is the premier artificial intelligence platform for language understanding. Its unique hybrid approach to natural language combines symbolic human-like comprehension and machine learning to extract useful knowledge and insight from unstructured data to improve decision making. With a full range of on-premises, private and public cloud offerings, expert.ai enhances business operations, accelerates and scales natural language data science capabilities while simplifying AI adoption across a vast range of industries, including insurance, banking & finance, publishing & media, defense & intelligence, life science & pharma, and oil, gas & energy. Expert.ai has cemented itself at the forefront of natural language solutions and serves global businesses such as AXA XL, Zurich Insurance Group, Generali, The Associated Press, Bloomberg INDG, BNP Paribas, Rabobank, Gannett and EBSCO.