Embroker Q&A: Cybersecurity, digital transformation

February 9, 2022 7:06 AM

di-server-generic-112217-A — Coaxial cables connect to a computer server unit inside a communications room at an office in London, U.K., on Monday, May 15, 2017. Governments and companies around the world began to gain the upper hand against the first wave of an unrivaled global cyberattack, even as the assault was poised to continue claiming victims this week. Photographer: Chris Ratcliffe/Bloomberg

Digital Insurance spoke with Steve Prymas, the chief insurance officer of Embroker, a digital insurance platform, about new products, cybersecurity and digital transformation within the industry.

The following responses have been lightly edited for clarity.

Embroker launched cyber insurance products in Nov. 2021, what was the decision behind that launch?

The cyber insurance products were in response to market demand.

There has been a material increase in all sorts of cybersecurity-related issues including business interruption and ransomware. This activity has gone unchecked and there has been a demand in the marketplace to protect small businesses from that exposure. Embroker is excited to help protect those small businesses.

Embroker has also launched some commercial crime products to cover theft by employees. There is a demand in the market for these products as well.

How does digital transformation fit in?

Digital has changed how our customers can purchase a policy. We don’t leave them alone in the digital wild but the ease and speed of digital are critical in making the challenges of even thinking about insurance easier. Digital is on the front end of this process, but humans are always available for assistance on the back end.

Digital is also increasing our analytics including how we price risk. Insurance can be fraught with bias and a digital-first approach creates an opportunity to remove bias.

Digital has also made risk management easier through digital products, we use a third-party vendor, specifically for cyber insurance, to assess a customer’s risk profile.

Embroker released some data related to small business risk last year, could you talk about that?

Part of the report articulates that cyber is a real issue but small businesses don’t think it’s an issue. When you look at the problem you can see it but no one thinks the problem will come to their doorstep. People often think, ‘I can see it happening in the world but it won’t happen to me.’ But the frequency of cyber incidents tells us that it will happen to your business eventually. It’s not a matter of if, but when.

It tells me clearly that small businesses understand the risk environment but not the idea that it will happen to them. It desensitizes them to risk and you can experience a huge loss that could destabilize your business if you underestimate the likelihood that there will be a problem.

The threats are there and they’re frequent and severe.

Any forward-looking statements related to cybersecurity?

It is easy to say that cyber is always going to be a growing problem and for example, Log4j hit the nail on the head of what insurers are worried about.

The reality of what we’re dealing with right now is a tremendous demand for cyber and pricing is high.

I worry for small businesses. I grew up with a family that had a small business and I think there is a lot to unpack in the litigation space. I think small businesses will struggle.

However, I’m excited about the future. I’m a lifetime insurance person and we are here to catalyze change and make life more simple.