Insurtech Descartes has announced the launch of Cyber Shutdown Cover, a parametric solution dedicated to cyber risk in France.
This new solution demonstrates the firm’s ambition to gradually extend its scope to emerging risks beyond just natural hazards.
“Our research team – which is constantly expanding – is also working on other sectors that can be better covered thanks to increasing data advancements,” explains Kevin Dedieu, co-founder and Chief R&D Officer of Descartes.
Tanguy Touffut, co-founder and CEO of Descartes, adds: “We build solutions for what is difficult to insure. Since 2018, we have seen that the parametric insurance model is uniquely primed to effectively protect companies against climate risks. We are now looking to apply this know-how to one of the other major threats facing businesses: cyber risk.
“Data and algorithms are at the heart of our business model. This is a momentous milestone for our company, as it marks the beginning of entry into new verticals linked to emerging risks.”
Currently, the cyber exposure landscape is crucial for small and medium-sized businesses. A ransomware attack can generate an average 21-day business shutdown, with an estimated daily operating loss of €800,000, notes the company.
Following a cyber encryption attack, companies must mobilise considerable resources to diagnose the attack, restore its information system and restart business operations.
Despite this, many SMEs do not count with cyber insurance protection. According to the French Risk Management Association AMRAEy, 9 out of 10 SMEs were not insured against cyber risk in 2022.
Descartes plans to insure against cyber risks by applying its expertise in parametric models to cybersecurity. The insurtech would assess the company’s vulnerability upstream, and define in advance with the customer and his broker a compensation amount per day of business interruption.
As a result, the proposed insurance policy offers coverage adapted to the financial cost of business shutdown, customised according to the policyholder’s profile, and the possibility of being compensated within a record time after an encryption attack.
Louis Bollaert, Chief Commercial and Marketing Officer at Descartes, said: “Thanks to our parametric models, we help customers calculate the amount of their financial losses in the event of business interruption, as soon as they take out the policy.
“This predefined parameter,combined with a very simple contract, enables us to intervene immediately after the attack. Thus drastically reducing its impact, especially considering that we can compensate our customers within 3 weeks of the resumption of activities, when traditional insurance requires several months before confirming coverage levels.”
He continued: “In a world turned upside down by climate change and the emergence of new risks, our ambition is to take 5% of the French cyber insurance market within the next 18 months”
With its Cyber Shutdown Cover, Descartes aims to contribute to the resilience of SMEs and corporates beyond their weather or natural catastrophe exposures.
“With the upcoming implementation in October 2024 of the NIS2 directive which aims to strengthen the cyber maturity of European companies, Descartes’ Cyber Shutdown Cover provides unequipped businesses with an innovative solution tailored to their key assets.” explains Léopold Larios, Cyber Director at Descartes.
Adding: “This model is also relevant for companies that have already been the target of attacks. In fact, Descartes’ Cyber Shutdown Cover supports businesses that have suffered a loss in the last 18 months. Unlike traditional models, we enhance the value of the cybersecurity investments made following an attack, by directly reflecting mitigation measures in the design of the cover offered.”
