One of the most obvious impacts of COVID-19 was the shift to remote working for non-essential workers. More than 18 months on, work from home arrangements remain for many amidst a bumpy COVID recovery.
Above: Ransomware is a pressing cyber threat for businesses. The proportion of ransomware attacks jumped by 62% between 2019 and 2020. Source: Statista
As workloads continue to go cloud first, this places a bigger demand on security due to an increase in the number of attack surfaces, forcing companies to regard every user as a potential security threat. This flow-on effect makes Google and Amazon’s entry into cyber insurance coverage this year especially well-timed because the pandemic has jolted businesses into online security awareness - GWP of standalone cyber policies jumped by 29 % between 2019 and 2020. By 2025, this niche but rapidly growing sector is forecast to be worth over 20 billion USD, with a CAGR of 24.3% over the next five years.
At the same time, the market is being driven by a highly dynamic risk landscape, higher rates, and higher loss ratios, making cyber a business line that is not only fluid but potentially very lucrative. To be primed for entry into cyber risk, a reinsurer requires strong partnerships with third-party experts to understand the characteristics of the newest cyber threat, to obtain valuable data fast so that cyber insurance pricing models can be promptly adjusted to account for the latest risk level.
API microservices provide the flexibility needed to meet these demands because of their serverless nature. Being fully configurable and customizable allows reinsurers fitted with API microservices to deploy their cyber products down the value chain with ease, updating cyber products with a mere few lines of code.
Adopting API microservices in the reinsurance industry has several benefits, one of which is the ability to collaborate with business partners who are leveraging the latest advancements in technology such as cyber readiness and AI-based tools. The incorporation of technology has revolutionized the way companies approach risk assessment, specifically when it comes to cyber-attacks. By utilizing advanced analytics tools, insurers, reinsurers, and brokers can now estimate the financial loss that would result from a cyber attack, as well as model worst-case scenarios, which can help them better understand how to diversify their portfolios and reduce their concentration risk.
One of the key advantages of using these tools is the ability to assess the risk of cyber attacks on customers in real-time, at the touch of a button. This means that companies can respond to potential threats more quickly, effectively reducing the impact of a cyber attack on their customers. The real-time aspect also enables companies to keep up with the rapidly evolving threat landscape and make informed decisions based on the latest data.
Moreover, incorporating AI-based tools allows companies to analyze vast amounts of data and identify patterns and correlations that might not be immediately obvious to a human analyst. This leads to more accurate risk assessments, which in turn helps companies make more informed decisions about the types of cyber coverage they should offer, and to whom.
In conclusion, having API microservices in place and utilizing the latest technological advancements in cyber readiness and AI-based tools provides a significant advantage to the reinsurance industry. By being proactive in their approach to cyber risk, companies can reduce their exposure to loss and better protect their customers, ultimately contributing to a more secure and resilient insurance industry.
Due to the agility inherent within API microservices, reinsurers can improve their reporting and data governance, and redesign their products soon after synthesizing disparate sources of information. The benefits that come from a serverless architecture place reinsurers in good stead for a future where risks will be amplified by remote working and an increased reliance on third-party technology and appliances.
PolicyDock is a global insurance technology leader, delivering best-in-class insurance innovation while providing today’s industry with the most seamless onramp possible. Guided by a world-class advisory board and with backgrounds in fields spanning insurance, fintech, artificial intelligence, cloud technology, and big data, the growing PolicyDock team is dedicated to delivering accessible innovation to the entire insurance industry.
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