Life as we know it has quickly transitioned to the screen, and with it, systematic shifts were made in order for many things to be not only digitally compatible but functional as well. This made for a huge paradigm shift in the definition of security and protection—as these things also needed to become digitally versed. This made for a giant leap in the insurance world, as it is projected that by 2030, insurance underwriting at most businesses will cease to exist and will instead be replaced by automation, machine learning, and deep learning models to keep up with this rapidly changing digital pace.
Underwriting is the process insurers use to determine the risks of insuring your small business. It involves the insurance company determining whether your firm poses an acceptable risk and, if it does, calculating a fair price for your coverage. Now, AI and algorithms will be responsible for this foundational part of insurance coverage—and although this might make this industry more digitally versed, it has many businesses skeptical of what this means for their coverage.
Businesses’ insurance coverage in the digital era will need assessments that truly understand their cyber risks. This isn’t a linear equation, however, as it depends on a multitude of factors such as what type of company it is, what industry it resides in, and what stage of growth the business currently ranks in.
Let’s first take a look at what’s at risk for companies who are digitally adapting, what they need to internally assess in order to protect themselves in the cyber world, and what one particular company is doing to help businesses build a secure armor of insurance in this modern world of business.
Data: The New Digital Gold
It was shown that 164.6 million records were exposed in 2018, and with the average cost per lost record at $150—just looking at these numbers alone it is clear that losing records of data can be detrimental to the budget of a business. Data is quickly becoming the currency in the cyber world that hackers are after, and in turn, companies need to vigorously strive to protect it.
For the success of both the business and the insurance company, cyber insurance providers must reduce ambiguity in their policies with innovative coverages that incorporate cyber policies as a priority—and not just stuck on as an afterthought. When providers evaluate policies for businesses in the digital world, they need to assess the cyber risks and form-fit the policy to the specificities of the company and the environment of the industry they reside in. For example, for businesses that hold a lot of sensitive data, such as medical or legal entities, a breach is going to be much more of a detrimental event than it might be for say an online business that simply holds the user’s shipping address.
In the past, when new coverages appeared in the market, they were made readily available by most insurers for little to no additional cost because they gave insurers a competitive advantage in a softening market. This makes for a customer-driven market where insurance companies will need to step up to the plate, and tailor policies to the business—showing that there is no set equation or “one-size-fits-all” when it comes to insurance products in the cyber world.
In order for insurance to be successful in the digital era, providers need to not only prioritize the utilization of technology but also be creative and innovative when it comes to insurance product design. Let’s take a look at the top things that companies need to determine in self-evaluation and how this can help insurers cover them accurately and securely in the cyber world.
Business Protection in The Digital Era
First off, it is important for companies to have point-person experts from various teams including persons savvy in compliance, legal, and information security across departments. From these people, the company should then gather and consolidate the security practice procedures that the typical insurer will be looking for in the case of your current enterprise. This is information such as compliance with privacy regulations, vendor management controls, third-party security measures, or cybersecurity in regards to network interruptions or backup procedures—just to name a few.
It is also important to review current controls and policies. In what ways has your business responded to increased cyber risks with employees now working remotely, or how are you training employees to avoid phishing and other social engineering scams. Once you have gathered all the necessary information and documentation, it’s time to do a review where you address any deficiencies and vulnerabilities—which is a tactic that insurers use as well as employing threat intelligence reports and monitoring and scanning a company’s networks for vulnerabilities. Finally, highlight improvements that could be made so that your company can delineate what efforts need to be prioritized within a set timeline.
Founder Shield, is an insurance that has created an intuitive insurance purchasing experience for high-growth and rapidly evolving companies in 2022. Integrating modern insurance markets and innovative technologies to ensure that people can make sure they’re covered for the digital era. Their insurance development plan focuses not only on creating a fully-digital purchasing experience for customers but also automates the time-consuming, back-office aspects that are typical of traditional insurance.
Building up the technological policies to make sure that their internal teams are supporting companies to the utmost capacity, Founder Shield focuses on providing the highest level of hands-on service and responsiveness. They take this even further by educating their clients on what it means to build technology within their enterprise so that they can enhance customer experience and assist in streamlining back-end processes—priming companies for growth and innovation in the modern world of insurance coverage.
The Future of Cyber Insurance
With the value of data increasing exponentially, the risk of vulnerable information continuing to be digitally transmitted in our technological age is accelerating concurrently. Regardless of which industry you’re in, it is time to level up in protecting your sensitive data.
This only comes from understanding where that data is being generated, where it lives within your company’s framework, and finally who can help you adapt to the times without compromising the safety of your business. Founder Shield is one company that has innovated business insurance for modern times, without endangering the integrity and security of companies’ insurance coverage.
Disclosure: This article mentions a client of an Espacio portfolio company.