Cyber data a new focus of AdvantageGo Ecosystem integration

Zywave’s pioneering industry loss database for cyber risk is at the centre of a benchmarking integration proof-of-concept being developed through AdvantageGo’s Underwriting Workbench.

Cyber is beyond an “Emerging Risk” growth area for the property and casualty (P&C) insurance market. Demand for cyber insurance is reflected in the exponential increases in premium year on year resulting in significant opportunity seen through allocations across carriers’ capacity to undertake prudent cyber underwriting.

To address concerns about the scale of cyber risks being underwritten, the sector is leaning on sources of trusted/reliable data, for risk selection, pricing individual policies effectively, and consideration for implicit vs explicit coverage, correlation/interconnected dependencies of supply chain business interruption, and addressing portfolio marginal contribution and unique impact for cyber of potential global catastrophic loss.

The growth of the cyber insurance market resembles a steep staircase, with new premium added year on year by cyber insurers. Driven by the engine of the US market, but increasingly finding buyers globally, and a major focus for London market insurers, the cyber market is set for further expansion.

Cyber growth

The global cyber insurance market was at $5.9bn gross written premium (GWP) as recently as 2019. By the end of 2021 that has jumped to $9.4bn GWP, with $20bn expected by 2025 and in the region of $29bn estimated by the end of 2027.

Will that growth in cyber premium continue to be profitable enabling sufficient capacity to remain on the table? New business should be priced accurately and in line with the broader risk appetites of cyber insurers.

Ransomware, data breaches, compromised business emails or communications, and supply chain vulnerabilities are all tipped to be major loss drivers for the cyber market. The recent rise in ransomware has been a particular cause for concern. Manufacturing has been the most expansive sector targeted, according to Munich Re, with services firms, retailers, healthcare, IT businesses and finance firms next in line.

Severe ransomware loss events have included those suffered by the UK’s Royal Mail in 2023 and mostly recently the NHS (National Health Service) in the UK. Attacks now occur almost constantly. Many have gone unreported or unshared – although regulatory demands mean firms are incentivised to come clean in the US and Europe when penetrated (and specifically the state of ransom payments). This regulatory framework is focusing carriers on in-depth analysis of trusted third party loss data to address risk in a similar way to the seismic shift in property modelling in the early 90s post Hurricane Andrew.

Cyber Risk Loss Insight

Zywave continues to pioneer collecting vital industry data on cyber-attacks. Its data can help fill in the gaps for insurers, through its Zywave Cyber Risk Loss Insight database, which contains extensive data from events, cases, mitigations and protections that underpin cyber rating.

The database includes physical loss, disruption or services, privacy violations, reputation damage, and more. These events involve first and third party incidents with quantitative costs for both the actual loss amounts and corresponding costs. The breakdown of the settlement components enables a carrier to more accurately determine weighting of specific losses across restitution, IP impact, ransom payments, counsel, PD/BI, injury/death, or specific cases that feed into predictive insight of trends as they play out over time.

Zywave is a key ally of AdvantageGo through the AdvantageGo Ecosystem. The two companies have been working on a way to harness Zywave’s groundbreaking Cyber Loss Insight database providing predictive analytical data insights into AdvantageGo’s Underwriting Workbench platform, providing cyber underwriters with improvements in risk intelligence that drive informed decision-making.

The cumulation of insights enables AdvantageGo to develop an innovative cyber product delivered through the AdvantageGo platform. Cyber data insights enable benchmarking of cyber risks against industry data, in context, through the Underwriting Workbench. These point-of-underwriting insights support risk rating components that may influence technical rating or downstream ingestion into model frameworks.

Third party data includes identified loss experience and threat actors, company background information, as well as cyber mitigation data. This is added to benchmarking for industry base rates, cyber incidents and breach costs.

Cyber benchmarking, too

An advantage to the Ecosystem, and to the way Underwriting Workbench works as a platform, is in combining best-of-breed insights from different third party partners to provide underwriting intelligence to inform decision-making.

Relativity6 is a recent Ecosystem partnership that is contributes further insights through the Underwriting Workbench to the cyber underwriter. Relativty6’s AI platform assesses current industry classification and flagging of hazard associated with an organisation as part of the pre-bind underwriting process.

For cyber risks, data providers typically refer to federal/state filing information that is notoriously unreliable and may present an incorrect basis for pricing risks. Identification of precise classification and flagging of hazards can enable a more accurate triage and rating assessment for cyber business in real-time.  

AdvantageGo uses Relativity6 as a data feed to Workbench, harnessing its NAICS and hazard information for pre-bind assessment, which can enable cyber underwriters to benchmark cyber scenarios, and come up with more accurate risk scoring and pricing.

Through AdvantageGo’s open architecture, data from Zywave, Relativity6 and other third party sources can be utilised on risk to portfolio level, contrast against trusted industry data and align to carrier submissions, risk appetite and capacity thresholds.