Startup Cowbell Cyber Launches 'Continuous Underwriting' Platform

Startup Cowbell Cyber wants to give small and midsize businesses (SMBs) a better way to get insurance coverage against cybersecurity threats.

The company formally launched on Tuesday with a continuous underwriting platform that it says will enable SMBs to get cyber insurance tailored to their specific cyber-risks and exposures.

Cowbell's announcement is one of two cyber insurance-related developments this week targeted at small and midsize organizations. The other is a partnership between security-as-a-service provider Coronet and Slice Labs that offers Coronet's SMB customers a potential discount for Slice's on-demand cyber insurance offerings.

The two new offerings are among a growing number of cyber insurance policies targeting organizations of different sizes. A report from A.M. Best this year described premiums for stand-alone and packaged cyber policies as growing 12% from $1.8 billion to just over $2 billion in 2018. Organizations looking to minimize cyber and reputation risk are driving much of the growth. The fact that many insurers have removed cyber coverage from traditional insurance coverage is another factor driving growth of stand-alone cyber insurance, A.M. Best said.

Cowbell's approach combines data from external sources — such as that pertaining to loss costs, business interruption, regulatory compliance, and the Dark Web — with internal data about an organization's current and ongoing security posture. It uses artificial intelligence and machine learning techniques to derive a risk score — or Cowbell Factor — for various insurable threats that organizations can then use to select appropriate insurance coverage.

The company says its approach allows organizations to get customized coverage against data breach expenses, extortion threats, loss of business, data replacement losses, fraudulent wire transfers, public relations costs, and other specific insurable risk exposures.

Unlike insurance policies that are based on a static assessment of an organization's risk exposures, Cowbell's continuous underwriting platform allows for policies that are based on an understanding of an organization's specific and ongoing security posture.

Jack Kudale, the CEO and founder of Cowbell Cyber, says insurers typically have a hard time understanding an organization's real-time exposure to cyber-risk because of a lack of data. "The biggest challenge for insurers is to gain [visibility] into [the] self-protection of an insured's operation," he says.

Typically, a set of 50 to 200 questions is currently used to determine an organization's cyber-risk and to underwrite insurance for it. The data is often subjective and static and does not represent the insured's current and ongoing internal risk posture, Kudale says. "The real chaos is on the inside he says."

"[Cowbell's] inside-out approach connects policyholders to top security aggregators such as AWS Security Hub, Microsoft Azure, or other SIEM platforms to obtain high level summarized information" about their security status, Kudale says.

Ongoing Risk Assessment
Organizations that sign up through Cowbell connect via API to AWS Security Hub or to Azure Security Center so metadata on their security posture can be collected and used in combination with external data to calculate risk scores on an ongoing basis.

"Policyholders do not need to have cloud participation neither will they require SIEM," Kudale says. But those that do can benefit from more accurate risk ratings and potential pricing benefits as well. "Although it is not necessary for the platform to function, it provides higher efficacy for the risk-ratings factor making the process of risk transfer more actionable," he says.

Kudale sees organizations with less than $100 million in revenues as, at least initially, the most likely to benefit from Cowbell's continuous underwriting approach. Companies of this size that purchase cyber insurance often have little idea about their cyber exposure or how much coverage to purchase, he says. Often, they buy such insurance only because the companies they do business with require it. "The broker on the other side has 30 different policies and has a hard time figuring out which product to propose" because of a lack of information, Kudale says.

Meanwhile, Coronet said its new partnership will give SMB customers the potential to sign up for Slice's cyber insurance at discounted rates. Slice will offer on-demand cyber insurance underwritten by an AXA XL company to Coronet's small business customers, the vendor said.

"One of the many benefits for SMBs is that this on-demand policy is subscription based," says Dror Liwer, Coronet's co-founder & CISO. "Many SMBs are seasonal, giving them the flexibility to have a policy in place when they're in business rather than a conventional, annual policy."

On-demand cyber insurance is insurance that SMBs can purchase online in minutes. All underwriting and risk assessment is done in real time at time of quote, Liwer notes. SMBs can get coverage for a variety of exposures including cyber extortion threats, credit monitoring, damaged data, reputation, liability coverage, and regulatory penalties, including GDPR, Liwer says.

"Coronet is not the insurance provider — AXA XL through Slice is," he notes. "The discount is offered because the insurer believes that customers using Coronet are in a better position to deal with a cyberattack."

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