Cyber Is A Unique Risk That Needs A Unique Insurance Model

Our Investment in At-Bay

Cyber Risk is a uniquely modern problem. The threats being insured for the most part didn’t exist when the big players in traditional insurance lines were founded. So it shouldn’t be surprising that traditional insurers are struggling to put together strong offerings in this space.

When I first met Rotem Iram, Founder and CEO of At-Bay, he took the first five minutes to very crisply lay out why this is the case: Traditional insurance lines like property & casualty assume that the risks involved don’t change much in the course of a year. So its fine to just consult an actuarial table and come up with a price and loss expectation. Cyber risk doesn’t work that way. What’s true to today and what might be the best, most accurate model for underwriting that risk, can easily change in days or weeks when a new set of exploits and threats appear.

As a result, insurance for cyber risk has to work differently. Sure, the first part is underwriting and evaluating the current risk faced by the customer. But once the policy is written, the insured and the insurer should be aligned in working to avoid a loss. For anyone that knows me well, knows that there are few things nearer to my heart than alignment of interest.

This is the model that At-Bay uses, they call it “Active Risk Management”. They can help potential customers identify risks up front and rather than just decline coverage, help them understand why, for example, having RDP ports open to the world might not be a great idea. Then, after binding a policy, they stay engaged with their customers and help them work when a new threat emerges…like the recent Windows 10 debacle.

Doing this well requires a team that understands the different worlds of insurance and cyber security and that can draw practical conclusions about how to minimize risk (Hint: email and hygiene for patching are the place to start). This is exactly the team At-Bay is putting together, combining security expertise from the managed services world with experts in insurance, underwriting and claims from around the industry. I’m excited to join the board as the lead investor in At-Bay’s series B and both help them in the journey and learn along the way.