Advances in artificial intelligence are in many ways a double-edged sword for the cyber insurance industry. Increasingly diverse and sophisticated cyber attacks have dramatically increased the demand for cyber coverage, giving insurers a lucrative opportunity to take advantage of it.
However, the complexity of cyber adoption makes it difficult for insurers to scale up their cyber operations quickly. To meet today's booming demand and increasing complexity of risk management while supporting remote working, insurers can take advantage of applying proprietary artificial intelligence (AI) technologies to increase efficiency and more effectively detect enable cyber threats.
The cyber insurance market is expected to grow by more than 25% annually between 2020 and 2030. However, these projections do not sufficiently take into account the operational complexity of rapidly scaling up cyber insurance offerings. This difficulty is caused in part by the need to process and analyze ever-increasing amounts of data to accurately predict attack risk. Underwriting cyber risks is also particularly challenging and time consuming due to the volatile state of the market, which is constantly fluctuating with regulatory shifts, technological advancements and the rapidly evolving threat landscape.
To meet the growing need for cyber coverage without compromising on reliability and customer service, insurers need to rethink their cyber insurance business. Constantly hiring new insurers to keep up will inevitably result in inefficiencies due to compensation costs, training requirements and human error. With AI, insurers can significantly increase the efficiency of their insurers and other staff at minimal cost and ensure the effectiveness of their coverage.
For example, AI can be used by insurers to process massive repositories of data and create visualizations to help human insurers understand potential threats that are difficult to detect through manual data analysis. In addition, AI automates time-consuming underwriting processes such as document vetting, risk score calculation, and intelligent routing to increase efficiency and reduce human error.
AI can also recommend cyber threat prevention services and policy features tailored to specific businesses and industries, enhancing the value of customer policies and increasing customer loyalty. Insurers using AI can deliver more accurate threat analysis, more tailored coverage, and a superior customer experience. Their customers will benefit from a simpler policy purchase process and chatbots that allow them to communicate with the insurer at any time to clarify the often complex nuances of cyber policy.
In the midst of the COVID-19 pandemic, 91% of businesses reported an increase in cyber attacks as cybercriminals exploited the vulnerabilities of a newly decentralized workforce. This is probably not a short-term phenomenon. While the pandemic has accelerated the trend towards digital transformation, the demand for cyber insurance will continue to increase as companies adopt new technologies and cyber threats evolve.
If the insurance industry is to meet this growing demand, it needs to renew its customer experience, underwriting processes and incident response strategy. Given the vast amount of data related to cyber threats, AI is undoubtedly the future in addressing the risks associated with these threats.
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