“Managing the rising cost of cyber insurance requires a collaborative approach across the industry… By working together, the industry can create a more resilient and sustainable market,” suggests Rehan Hussain, Head of Underwriting in the UK and Europe at cyber risk solution company Resilience.
Hussain’s comments stem from an interview with Reinsurance News in which he discussed varied topics such as cyber pricing, the threats and benefits of AI, and the firm’s outlook for the near and long-term future.
When asked how the industry can manage the rising cost of cyber insurance, Hussain noted that a “collaborative approach across the industry” is required.
He added, “Cyber insurers, buyers and regulators can all influence some level of cost control by implementing strategies to prevent costs from growing out of control. Insurers can help by promoting proactive risk management and cyber consultancy to their clients to enhance their cyber security controls and offer coverage incentives for improvements in their security posture.
“Buyers can contribute by ensuring their security standards are up to industry best practices and work towards further improving their controls in an evolving threat landscape.
“Regulatory bodies can play an important role by promoting cyber security best practices for companies of all sizes which will encourage better risk mitigation and create more awareness around the importance of good cyber hygiene.”
According to Hussain, through collaboration, sharing insights, and emphasising continuous risk management, the industry can “better manage the challenges of rising cyber insurance costs.”
In a similar vein, Reinsurance News then asked how a more collaborative approach between insurers, brokers, corporate buyers, and regulators can help tackle other challenges faced by the cyber insurance market.
Hussain observed that if these entities pool together expertise, insights, and resources collectively, better strategies could be developed to tackle the evolving landscape of cyber risk.
“Each individual stakeholder brings a unique level of industry knowledge: insurers can contribute anonymized data about their cyber incidents and claims, brokers can provide valuable market insights through their deep understanding of clients’ needs and industry trends, corporate buyers can share information about their cyber security measures for accurate risk evaluation, and regulators can provide guidance on acceptable insurance practices ensuring that policies align with regulatory requirements,” Hussain explained.
He went on, “In short, a collaborative approach encourages all parties to work together to achieve a safer, more resilient cyber insurance market that effectively addresses the evolving cyber risks faced by organizations.”
Moving onto the hot topic of AI, Reinsurance News asked Hussain about some of the potential dangers and benefits that could arise in the cyber insurance industry amid AI integration.
Hussain said, “From a positive viewpoint, AI can empower insurers to enhance their risk assessment by analyzing vast amounts of data from various sources more accurately.
“Furthermore, AI-powered tools can assist underwriters in evaluating cyber risk leading to more informed decision-making on pricing and coverage reducing the likelihood of over or under-pricing a risk.
“Insurers who adopt AI technology and utilise it effectively, will have a competitive advantage and will be able to offer their clients more innovative, customized, and efficient cyber insurance solutions.”
Turning to the potential hazards of AI, Hussain said, “The downside of AI really needs to be understood to mitigate the potential dangers that can arise. Relying solely on AI algorithms without human oversight could lead to a biased decision-making process or misinterpretation of data leading to unfair coverage or even denial of coverage.
“An increase in AI-driven Cyber-attacks are a growing concern; while AI can be used to detect and prevent cyberattacks, it can also be exploited by attackers to launch more targeted and sophisticated attack campaigns. Further, the loss of human interaction in the insurance business has the potential of diminishing a long-standing personalized service and support culture that customers value.
“Balancing the benefits of AI with its potential dangers requires careful consideration to ensure that AI technologies are used in ways that align ethically and within regulatory frameworks that promote responsible integration of AI in cyber insurance.”
Concluding the interview, Reinsurance News asked what to expect from Resilience in the near and long-term future, to which Hussain answered, “Resilience’s recent expansion into Europe reflects the global nature of this threat. Enterprises around the world suffer from the challenges of managing this technical risk, while growing their digital innovation efforts.”
He noted that the firm saw a “tremendous opportunity” to recreate this partnership model across the U.K. and E.U. and is thus “wholly invested” in building out the same growth seen in the U.S. market.
Drawing the interview to a close, Hussain said, “We will also continue to build out our solution and capacity to support larger enterprises. Many of our staff come from this market segment and understand that the challenges of cyber risk only grow as you get into larger organisations with more data to protect, and more established work silos that need to be coordinated.
“Resilience is just getting started and we’re all incredibly excited to see where this journey takes us. As the cyber threat landscape continues to evolve so will the way we help our clients tackle cyber risk.”
