The cybersecurity insurance industry is facing a significant challenge when it comes to attracting businesses to purchase or renew policies. Rising premiums and the increasing threat of cyberattacks have made cyber insurance unaffordable for many organizations, particularly small- and medium-sized businesses (SMBs). However, artificial intelligence (AI) is emerging as a solution to bridge this gap and make cyber insurance more accessible and affordable.
Real-Time Risk Assessments and Underwriting Improvements
AI-driven real-time risk assessments are crucial in helping organizations reduce the probability of a breach. By continually improving and augmenting cybersecurity strategies, insurers can provide clients with better coverage and pricing. According to Anthony Dagostino, Global Chief Cyber Underwriting Officer for Commercial Lines at AXA XL, having good endpoint detection and response (EDR) in place can lead to better-preferred pricing for smaller organizations. This not only makes cyber insurance more accessible but also increases awareness overall.
Key Drivers of Cyber Insurance Claims
Ransomware attacks, social engineering, phishing, and privileged access credential attacks are the primary drivers of cyber insurance claims. Ransomware attacks, in particular, have been on the rise, followed by supply chain attacks and business email compromise (BEC) attacks. In 2023, BEC attacks doubled compared to the previous year, and supply chain attacks increased significantly. These attacks not only increase premiums but also make cyber insurance unaffordable for many businesses.
The Role of AI in Streamlining Processes
AI is playing a crucial role in streamlining various processes within the cyber insurance industry. Traditional risk assessments can be time-consuming and costly, with assessments costing between $10,000 to $50,000 and taking four to six weeks to complete. However, AI-based systems are cutting claim processing times by over 80%, reducing the average cost from $15,000 per claim to a fraction of that amount. Companies like At-Bay, Corvus Insurance, Cowbell Cyber, Paladin Cyber, and Resilience Insurance are leveraging AI to streamline cyber insurance processes.
CrowdStrike’s Platform Strategy for Improving Insurability
CrowdStrike has launched Falcon for Insurability, a program that aims to revolutionize cyber insurance using AI and large language models (LLMs). This program allows cyber insurers to provide clients with AI-native cyber protection at preferred rates. The reduction in premiums is expected to be in the range of 10 to 30%. By quantifying risk in new ways, insurers can make smarter underwriting decisions and offer more affordable coverage. Organizations using Falcon benefit from enhanced cyber resilience and reduced underwriting risk.
The Importance of Human-In-The-Middle AI Workflows
While AI is crucial in improving cybersecurity and cyber insurance, human expertise remains essential. CrowdStrike’s Managed Detection and Response (MDR) service combines AI-powered defenses with human expertise to create an infinite loop of continuous improvement. This approach is why cyber insurers are eager to collaborate with CrowdStrike. Other companies, like Resilience Insurance, also emphasize the importance of human input in their AI models, using exercises to help experts think probabilistically and providing targeted questions that influence their models.
Predictive Attack Paths and Proactive Defense
Traditional insurance models that cover isolated incidents don’t work for cyber insurance. Instead, advanced AI and LLM technologies are needed to identify and anticipate potential attack paths. Predictive attack paths provide real-time insights that reduce risk and the probability of an attack. By reducing risk, cyber insurance becomes more affordable and policies become feasible for a broader base of clients. These technologies also bring greater stability to cyber insurers by minimizing the potential for simultaneous, large-scale cyber events.
Making Cyber Insurance More Accessible
One of the challenges organizations face when applying for cyber insurance is the lengthy and often opaque application process. Many companies spend months going through the process only to be rejected without explanation. However, the industry is moving towards removing barriers and identifying the tools and platforms needed to reduce the probability of a breach. Vendors like CrowdStrike are leading the way by offering innovative solutions like Falcon for Insurability. As more cybersecurity platform vendors adopt similar strategies, the industry can reduce the risk of breaches, drive down premium costs, and increase market share across SMBs, mid-tier, and enterprise customers.
In conclusion, AI is transforming the cybersecurity insurance industry by making it more accessible, affordable, and efficient. Real-time risk assessments, underwriting improvements, streamlined claims processing, and proactive defense strategies are all benefiting from AI-driven solutions. By leveraging AI technologies, cyber insurers can bridge the insurance gap and provide organizations with the coverage they need to protect against cyber threats.
