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June 10, 2021

Insurance & Politics

FBI director compares ransomware threats to 9/11 terrorism attacks

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What: FBI Director Christopher Wray and many Biden administration officials are sounding the alarm about ransomware and positioning it as a national-security threat.  

Why it matters: The FBI director’s statement highlights how we’re seeing just the tip of the iceberg regarding the potential economic impact from cybercrime and ransomware. Hopefully the increased government attention creates more daunting challenges for ransomware criminals and starts reducing the losses incurred on cyber policies. 

Read: Ransomware Attacks in the US is ‘Comparable’ to 9/11 Terrorism Threats Two Decades Ago, FBI Director Says

Industry Challenge

Cyber rates are going up, but is it a sufficient increase?

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Backstory: The quantity of cyber claims is rising. In response, carriers are hiking rates on cyber policies. But with claims unlikely to slow (according to Fitch Ratings), concerns abound around the long-term outlook for cyber coverage. 

Quote: “‘The cyber market faced a reckoning in 2020, as loss experience deteriorated, particularly from an influx of ransomware incidents,’ said Fitch Managing Director James Auden. ‘While cyber premium rates are rising sharply, concerns remain that underwriters can successfully price this business longer term.’”

Why it matters: Demand for cyber coverage is growing in parallel with insurers realizing how hard it is to accurately price the risk. One pricing challenge is that cyber coverage is generalized. An emerging solution to this problem is specialization — focusing on a specific industry or risk type.

Read: Cyber Insurers Hike Rates But Worry About Pricing Long-Term As Losses Mount

Insurtech

Almost $1B invested in Insurtech in a single day

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What: On June 1, 2021, wefox received a $650mm investment to expand its Insurtech platform into the US and Asia, and Bought by Many received a $350mm investment on the same day. 

Why it matters: Both companies are focused on providing a simplified, digital experience tailored to their customers, which is producing a great return. Traditional insurance has many issues, and the money flowing into Insurtechs is evidence of the huge growth possible for companies that solve those issues.

Read: wefox valued at $3bn, insists it’s definitely an insurtech not an old insurer
London’s pet insurance provider Bought By Many brings home $350 million bones, now valued at over $2 billion

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