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RPS Reports: Actionable Takeaways from WSIA 2024
Here are key takeaways from the biggest insurance industry event of the year, including actions to consider taking now.
Threats to cybersecurity are becoming more severe as more people work from home, deepening reliance on the internet. Ransomware attacks, in particular, have become incredibly common. These cyber attacks wrest control of critical data or systems from an organization and then demand a ransom in exchange for the data. Some experts predict that ransomware will cost companies a combined total of $265 billion by 2031.*
As the crisis gets worse, companies have been looking for cost-effective solutions.
In the past, standalone cybersecurity companies would often contract with those looking to protect themselves from cyber attacks, providing back-office tech protection and other managed services intended to prevent widespread damage or data access due to a cyberattack.
Insurtech is creating a new approach to this classic internet-era problem. By combining cybersecurity with insurance protection, insurtech is helping companies to holistically manage their own risk.
Insurance companies that underwrite cybersecurity have an inherent and vested interest in keeping their clients safe, because successful hacks directly affect their bottom line. It's one reasons that the synergy between insurance companies and cybersecurity works so well — which insurtech companies have started taking advantage of in recent years.
But, in this new and evolving space, how can clients make sense of not only a provider's cyber capabilities but their insurance bonafides as well? It's going to require some new approaches and education on the part of clients.
Insurtech is less of a defined field than a way of reinterpreting a classic problem. Simply put, it's an approach to insurance that tries to find new ways to use cutting-edge technology to disrupt the traditional insurance field.
Traditional insurance groups people into tiers based on risk and exposure, and then sets rates for each tier. By design, people on the higher and lower ends of each tier receive a slightly worse deal, simply because a larger group of people form an average. These people at the edges end up paying slightly more for less.
But insurtech can disrupt this process by working with significantly more customer data than their traditional counterparts. So instead of using tiers, some insurtech companies have sophisticated enough information-gathering processes that they can put each customer on a separate point on the overall spectrum. If you know enough about the customer, you can avoid the problem of unfair grouping altogether, creating a method that's more work intensive, but fairer for everyone.
But insurtech companies don't necessarily need to hire more employees to do more work: Many have been developing custom-built AI specifically to solve this problem.
Insurtech companies have turned to artificial intelligence (AI) programs that can automate many of the processes that traditional insurance companies have long relied upon employees to do. Not only can AI decrease overhead costs of processing and underwriting claims, AI can often handle these processes more accurately than humans.
AI is currently being used to make almost any kind of insurance quote or cost less expensive by making them more accurate. Some experts predict that AI programs will be able to automatically process claims and adjust rates in real time, fully eliminating the need for human interaction. While this stage of machine control is still quite a ways off for the greater insurance industry, companies have shown great interest in moving in this direction.
Of course, a trend to AI doesn't mean that insurtech companies are trying to automate the customer service elements of their business. On the contrary, this increased emphasis on AI work and machine learning frees up employees at insurtech companies to focus on delivering higher quality human-to-human services.
The good news for companies as well as individuals is that, by combining the power of new technologies with traditional coverage, the interests of insureds as well as their insurance companies are aligned as never before. Not only can today's insurtech providers cover potential losses associated with a data breach, they can help their customers better protect themselves in the first place, saving both parties time and money in the long run.
This protection can include best practices as simple as requiring multi-factor authentication (MFA) on all covered systems or as advanced as firewall and traffic analysis protections. By requiring new controls on customers' tech stacks, costly hacks can be avoided and mitigated before they become major problems.
That's a big promise. Can today's insurtechs live up to it? It depends.
It's no secret that tech companies tend to shoot for the stars and offer the moon when it comes to signing new customers. Often, the reality of cutting-edge technology doesn't always live up to the promise. When considering a tech-enabled insurance partner, keep those expectations in check by asking a few questions:
Insurtech companies like RPS understand that insurtech itself combines ideas and synergies that yield better results for everyone involved. The combination of increased cybersecurity and tech advancements means that insurtech companies are moving further into cyber space, as the entire global economy moves in a very similar direction.
*Braue, David. "Global Ransomware Damage Costs Predicted to Exceed $265 Billion by 2031," Cybersecurity Ventures, 2 Jun 2022.