By Archie Whitehead, Tech, Media and Cyber Broker at New Dawn Risk
Network scanning has become a powerful tool for assessing a cyber risk, as it can offer a comprehensive report of a company’s IT environment and highlight key vulnerabilities at the press of a button. Though these scans are highly useful for gathering information, some cyber markets are starting to use them as gospel when evaluating the risk of potential clients. Cyber carriers should be wary of basing their full rationale off network scans, as this method simply cannot account for all the potential exposures a cyber carrier may be vulnerable to while on-risk.
For example, one major blind spot for network scans is that they do not pick up on a company’s Operational Technology (OT) environment. While this may not be of concern for certain industries, OT does account for a significant portion of cyber exposure in many industries (for example, manufacturing). When OT exposures are not accounted for, the accompanying risk will not be priced accordingly. While this may seem like a great result for the policyholder, who receives comprehensive cover at a cheaper cost, the insurer is putting both themselves and the insured in a precarious situation should a claim arise.
Additionally, network scanning does not take into account a policyholder’s governance – whether that be around culture, the use of employee security training, phishing simulations, or any other tools that can be used to boost prospective clients’ cyber hygiene beyond the realm of IT systems. Once again, subsequent pricing will not accurately reflect the risk at hand when these factors are overlooked.
As prior experience has shown, when loss ratios increase for these carriers, there becomes a need to determine what is going wrong and what needs to be changed. The dependency on scans as an underwriting process poses a hard question: have we learned anything from the last market cycle? Will the same occur again, with insurance companies unexpectedly non-renewing accounts, or unjustly increasing premiums even though the insured has not done anything to warrant such an increase?
If the cyber claims environment deteriorates once more in frequency and/or severity, there is concern that these carriers that have gained a large market share by warranting cheap rates through their scan reports will leave a huge gap in the market, potentially leaving clients stuck without a solution. By extension, this can cause anxiety around having to move policies to alternative carriers and essentially leave both insureds and brokers out to dry. Brokers may be held liable and will have to explain to clients that their cyber policy was placed with a carrier that did not account for all potential exposures.
Ultimately, network scans themselves are not the concern, but the use of such as a substitute for traditional risk assessment could become a major issue. These reports should be used in addition to the other underwriting tools within a cyber insurer’s arsenal; the danger comes in thinking they can replace human rationale and insight. Those in the cyber market should brace themselves for when this scanning bubble may eventually burst…
6 March 2023
Several dynamic changes in today’s insurance environment have made risks unpredictable, rendering them difficult to model and tricky to determine accurate return periods. These changes have led to certain lapses in coverage, creating a growing need for innovative solutions. In response, parametric insurance has emerged as an effective risk-mitigating solution that offers certainty and protection for these gaps.
Our latest white paper, Parametric insurance: The scope of solutions for agriculture and natural catastrophe risks, walks through the trends, triggers and unique solutions associated with this non-traditional insurance product.
Download the white paper here.
Aditya Singh, Head of Treaty at New Dawn Risk, commented: “Many global providers prefer parametric insurance, as it does not require them to understand the complexities of the inherent risks vis-à-vis the assets they invest in. This whitepaper discusses the fundamental ability of parametric insurance to cover products ranging from complex agricultural risks to property damage arising out of large natural catastrophe events.
Max Carter, CEO of New Dawn Risk, added: “Ultimately, parametric insurance can provide an affordable solution for large-scale insurance of catastrophic risks in exposed areas, and we expect this to become more widely adopted over the next several years.”
Notes to Editors
Established in 2008, New Dawn Risk is a dynamic, specialist insurance intermediary providing bespoke advisory solutions. We focus on complex, international liability and other specialty insurance and reinsurance. Clients large and small profit from our expertise, creativity and responsiveness – from risk assessment through to claims.
New Dawn Risk has today launched its latest white paper on insurance for the US legal cannabis, CBD and hemp markets. The 2021 report is called “Opportunity knocks at last in the US cannabis insurance market”.
Download the white paper here.
Since the publication of the previous report in 2020, US sales of medical and recreational cannabis have grown exponentially, reaching $17.5 billion in 2020, a 46 percent increase from 2019. In addition, the legislative landscape in the USA has been transformed by the arrival of the pro-cannabis Biden presidency, supported by a Democratic majority in both Houses.
A new CLAIM (Clarifying Law Around Insurance of Marijuana) Act has been introduced to the Senate, alongside the parallel SAFE Banking Act, and both are expected to pass into law by the end of 2021. This will at last permit insurers to work with the cannabis industry legally; and will also reduce some of the insurance risks that previously dogged the industry. For example, D&O cover will become a legally available option, and marijuana businesses will be able to regularise their banking and cash operations.
The updated white paper examines the key drivers of growth whilst exposing both the potential premiums and the size of the insurance gap for the cannabis industry in the US. Headlines include:
- 36 US states, and Washington D.C., have now legalised cannabis for medical or recreational use.
- Americans now spend almost as much on legal marijuana products as they do on Coca Cola.
- Cannabis dispensaries were deemed “essential businesses” by many states and therefore remained open during lockdown.
Max Carter, CEO of New Dawn Risk, commented: “The legal and regulatory environment of the cannabis industry has transformed over the past year.
“The changing attitude towards the cannabis industry, and new State and Federal legislation present an exciting opportunity for insurers to work with growers and sellers. With legalisation of banking and insurance, the door seems likely to open to what could be a $1bn premium market.
“On the consumer side, cannabis was deemed an “essential business” during the Covid-19 pandemic, and the growth of the sector seems inexorable. New Dawn Risk is committed to working with carriers and clients to share knowledge and insights to help identify and deliver cover for this untapped market.”
Notes to Editors
Established in 2008, New Dawn Risk is a dynamic, specialist insurance intermediary providing bespoke advisory solutions. We focus on complex, international liability and other specialty insurance and reinsurance. Clients large and small profit from our expertise, creativity and responsiveness – from risk assessment through to claims. 95% of our business emanates from outside the United Kingdom.
New Dawn Risk’s report casts light on the improved prospects for international firms as India aims to deploy drones, satellites and mobile technology in an effort to cut insurance costs
Download the white paper here.
Singapore, November 2nd 2020: Lloyd’s broker New Dawn Risk has today launched its new report: Technology brings new opportunities for India’s crop insurance scheme
The report details changes that have been made to the government-sponsored scheme during 2020, which are designed to make it more efficient and ultimately more attractive for the nation’s farmers and for participating insurers. These include the introduction of a three-year contract for insurers; and strict rules to both prevent delays in claims handling and avoid moral hazard.
The centre point for change, however, is the introduction of a range of new technologies, including a mobile portal, and the use of sophisticated drone and satellite technologies. All of these are designed to allow automated handling of the many claims that the scheme generates, and, ultimately have the power to transform the profitability of the scheme for insurers and reinsurers.
Contributing to the report, the Agricultural Insurance Company of India commented: “With the advent of new concepts in agriculture, the scope for crop / agriculture insurance in India is vast. The main challenge is consistency. The scheme has changed drastically in a very short space of time. Reinsurers believe there is ample opportunity but only if they decide to commit to this product for the longer term and take a long-term view despite the changes.”
Max Carter, CEO of New Dawn Risk commented: “India could certainly see new reinsurers entering its state-sponsored agricultural insurance market if costs were driven down for the local insurers, who have previously borne heavy administrative and operating costs.”
“The increased use of satellites and drone imagery technology and adoption of high-quality mobile apps to carry out CCE’s, remote sensing methodologies to assess crops and low-lying satellites (LEOs), means that India has taken positive steps towards increasing efficiency and reducing costs of administration. We hope that, with such positive news, our guide will be a useful source of information for international reinsurers who might consider participating in this refreshed scheme.”
For more information: Victoria Sisson, Luther Pendragon, +44 (0)7941 294872
New Dawn Risk Group Limited has today launched its white paper analysing insurance cover for the US legal cannabis, CBD and hemp markets.
Download the white paper here.
The report: “Understanding and opening up the US cannabis insurance market”, exposes both the potential premiums and the size of the insurance gap for cannabis-related products in the US. Headline statistics include:
- In 2018 sales of medical and recreational cannabis in the U.S. were nearly nine times higher than sales of Oreo cookies.
- The legal US cannabis industry would pay about $1 billion in annual premiums were it insured to levels normal for other businesses.
- In 2018 the US market saw an estimated $8 billion in legalized cannabis sales. This could rise to over $40 billion by 2025.
The report also looks at the challenging legal environment for insurers, discusses possible coverage solutions and analyses the issues for each category of insurance cover, including: D&O, cyber, product liability, workers compensation, cash and contents insurance, crop insurance and fleet auto and cargo.
Max Carter, CEO of New Dawn Risk, commented: “Legal cannabis is a rapidly growing market, currently with a legal foothold in over thirty US states. Right now, the COVID-19 outbreak has led to increased demand for cannabis in the US and stores in many states have been allowed to reopen or offer curbside sales. However, the crisis has also exposed the financial pressures on many cannabis firms, with many VC-backed cannabis firms struggling already to meet financial projections. A COVID-19 recession, which seems all but a certainty, will only increase such financial pressures for young cannabis businesses.
“The pandemic will make it even tougher for cannabis producers to obtain insurance as providers further tighten terms and conditions and introduce exclusions, while insurers who may have been looking to enter the marker will put their plans on hold. With the Federal Government shut down and the possibility of a change of administration in November’s presidential election, the progress of legislation that would open up the cannabis market to insurers will be delayed.
“This reality fails to reflect the fact that many firms have significant insurance needs that are critical to help them manage the risks that exist in this young industry, with its untried legal and societal framework.
“Despite all this, the growth of the sector is inexorable and New Dawn Risk is committed to working with carriers and clients to share knowledge and insights to help identify and deliver creative solutions for this market. In just one example, we have already successfully placed cyber cover for a number of cannabis businesses. But we want to do more. And that means furthering the discussion, which is where we hope this report can contribute.”
Notes to Editors
Established in 2008, New Dawn Risk is a dynamic, specialist insurance intermediary providing bespoke advisory solutions. We focus on complex, international liability and other specialty insurance and reinsurance. Clients large and small profit from our expertise, creativity and responsiveness – from risk assessment through to claims. 95% of our business emanates from outside the United Kingdom.
