Tuesday, May 21, 2024

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View cyber as high frequency, low severity, suitable for captives

The sheer volume of cyber-attacks taking place without corporations knowing lends itself to understanding cyber as a high frequency, low severity risk, thus opening the door for more captive involvement, according to Ryan Dodd, CEO and founder of Intangic.

Intangic was launched in March this year offering a parametric product targeted at large corporates.

It is a technology company – as well as an MGA and captive owner in Guernsey – that has built an approach to cyber based on measuring the volume of attacks on public corporations.

The parametric policy, which has a limit of $15m and is backed by AXA XL, is triggered when Intangic’s data-stack recognises an uptick in malicious cyber activity coupled with the insured’s financial indicators.

It is designed as an early warning system in advance of a large breach, with Dodd envisaging claim pay-outs being used to supplement existing cyber security budgets.

“Traditionally, and correctly so, corporations were interested in answering the question ‘how many attacks did we block?’ especially when it comes to reporting to the board or reporting across different verticals within the company,” Dodd said in an interview on GCP #87.

“But the question I think that should be asked is, ‘how many did you not block?’ and that has certain implications.

“One of them is that we think that cyber actually, based on the data and the facts, when you look at any sort of major cybersecurity company when they release figures on the number of attacks that are taking place on a given day, and when you talk to chief information security officers (CISOs) at large corporations, which is our target market, they will tell you that cyber is happening every day. Attacks are happening every day. This is a high frequency risk.

“And so when we ask the question, how many are you not blocking, then the answer is it’s a high frequency risk.”

Although the number of captives writing cyber risk continues to rise in tough commercial market conditions, there is often debate as to its suitability because of it traditionally being viewed as a low frequency, high severity risk.

Captive Intelligence reported in May how Belgian chemical company Solvay is using a captive in its cyber programme, while also building capacity from the commercial market and being a member of cyber mutual MIRIS.

Mark Heath, head of insurance and chief underwriting officer at Intangic MGA, joined the podcast discussion and said he felt the flexibility of captives in terms of coverage, wordings and attachment points meant they could be utilised alongside the Intangic parametric product.

The parametric pay-out is also seen as complimentary to the large indemnity policies multinationals are already buying in the commercial market.

“When you’ve got a board of a captive who is already decided that they need to take some more control and they’re looking at lots of different risks, as well as emerging risks, going into the captive and they’re flexible in the wording they use, then our cover can be very effectively used as a reinsurance for that captive,” Heath said.

“Why we like captives is it’s built to be a cybersecurity risk management tool and risk transfer and therefore we are helping companies to get, if you like, to the left of things earlier to see those pre-events so the captive has got a capability to inform the parent company and then there’s a very quick trigger.”

Finally, Intangic has also established its own insurance vehicle in Guernsey, similar to a captive, so it can participate in the risk transfer of the product.

“Most of my career has been in taking risk and so it was very important that we gave ourself the ability and the vehicle for us to take a risk alongside our partners,” Dodd added.

“I believe that we have a technology that gives us quite an advantage and allows us to do a lot of things. Being able to monetize that technology in various ways, including taking risk, that’s really the reason why.”

Listen to the full interview with Ryan Dodd and Mark Heath, of Intangic, on GCP #87. Listen on the Captive Intelligence website or on any podcast app, by searching for ‘Global Captive Podcast’.