As underwriters, managing general agents and brokers embrace technology to enhance their business, it’s in with the new, but not out with the old. Experience counts when it comes to specialist IT support for insurance companies.
For insurers, cyber is a growth business. According to the reinsurance giant Swiss Re, the global cyber insurance market tripled in volume in the five years to 2023, with gross direct premiums of $13billion in the previous year. By next year, it is expected to grow to $23 billion. Consultant PWC has described it as ‘one of the few areas of growth and innovation’ in the market.
It is, however, still small beer set against the risk, as Swiss Re’s report recognises. Economic losses from cyber crime are estimated at $8 trillion in 2023, with forecasts they will reach $10.5trn by 2025. Over the last decade, the ten worst data breaches alone exposed more than 1 billion people. Malware attacks hit 5.5 billion in 2022. Ransomware remains a massive challenge.
All in it together: Cyber risks to insurers
For insurers, that’s an opportunity but also a challenge. First, as Aon’s report on US market trends earlier this year noted, systemic risk – the threat of a single event or vulnerability causing widespread losses, remains a top concern. Second, the rising risks driving the cyber insurance market’s growth also threaten insurers’ own businesses. That’s been graphically illustrated this year:
- At the end of March, Prudential Insurance Company of America announced that hackers had stolen the information of over 36,000 people in an attack for which ransomware gang AlphV claimed credit. The attack came less than a year after a breach the previous May, exposing 320,000 customers.
- In July, Japan’s Tokio Marine reported a potential leak of 63,200 policyholders’ personal information.
- Fidelity Investments Life Insurance in March said that data of more than 28,000 customers was accessed through a hack of its third-party service provider Infosys McCamish Systems.
Another PWC survey last year of the top ‘banana skins’ facing insurance businesses themselves found cyber topping the list of concerns. As the report noted, ‘The challenge for insurers is that as their businesses become more complex – with new hardware, cloud computing and third-party services in longer supply chains – cyber vulnerabilities unfortunately increase.
‘Criminals are becoming more adept at monetising their breaches, and with the prospect of sensitive customer data leaks, it seems that for the insurance sector the ability to be resilient to cyber-attacks is a core requirement, with cyber security being less a ‘bolt on’ and rather something to be designed into the business and IT architecture.’
A range of risks
In fact, insurers face the whole gamut of risks faced by their insureds, not just cyber attacks, ransomware and data breaches, but also downtime and regulatory risks. Last year, Sweden’s Authority for Privacy Protection fined insurer Trygg-Hansa $3 million for exposing data from hundreds of thousands of customers on its online portal.
In many cases, vulnerabilities reflect wider IT challenges of ageing systems, disparate technologies, increasing costs and skills shortages. And it’s not just underwriters. It’s managing general agents, brokers, and the whole industry involved in protecting against cyber risks.
The coverage they facilitate and advice many provide offer increasingly vital support for companies and organisations across the economy to conduct their business with confidence. But who’s supporting the industry’s IT?
Who’s protecting the protectors?
A particular challenge
Solutions do exist, but challenges remain.
The cloud, for instance, offers a compelling alternative to the difficulties of managing and maintaining in-house technology infrastructure. Moreover, as McKinsey & Company suggests, the benefits of the cloud lie in two areas: ‘Rejuvenation’, using the cloud to lower costs, for both IT and core operations; and innovation, harnessing the cloud to accelerate or develop new revenue streams.
The cloud can accelerate the time to market for new products or services, reduce the cost to serve, enable economies of scale and provide access to advanced capabilities that are impractical, expensive or impossible to host on-site. Insurers in McKinsey’s survey mentioned machine learning, natural language processing and harnessing the Internet of Things among the cloud-enabled capabilities most relevant to their business.
However, to access such features, insurers, MGAs and brokers need support to migrate systems, and modernise and adapt their infrastructure to support what is not simply new technology but a new way of working. That migration and end solution must also account for the industry’s particular needs: Robust cybersecurity to protect sensitive data; compliance with a rigid regulatory environment; and the need to work with a range of existing systems, old and new, whether to replace or update them.
Crucially, it requires an understanding of the industry and how underwriters, MGAs, brokers and others work, the challenges they face, and their businesses’ needs.
Why Intersys? Decades of experience in insurance
Intersys has almost three decades of experience working with the insurance sector. Our managing director, Matthew Geyman, started his career as a computer manager for an underwriting firm. From the days of mainframes to sophisticated placing software and other technology today, he’s worked closely with the industry to meet its challenges of streamlining processes, automating activities, protecting data and ensuring compliance.
He’s supported by a wider team with significant experience in the industry, too. Tony Healey, our senior analyst and developer, also started out working in the London insurance market. Malcolm Alexander, who headed an IT services company that pioneered electronic trading in the London insurance market, is a non-executive director. Catherine Geyman, Director of Risk, has a deep insurance and consulting background, with particular focus on Captives and reinsurers.
Today we provide IT infrastructure, security, outsourced solutions and cloud infrastructure design and support for critical firms within the London Insurance Market. We support placing platforms, underwriting, claims management and exposure management systems. We also provide outsourced IT for fintech firms that are critical suppliers to large insurers.
Our newest office (opening summer 2024) is in Leadenhall, the heartland of the insurance market. Our experience is deep within it. We understand the business, the regulations – both ICO and FCA – and our security-first approach means we are ISO27001 certified. We’re experts in our fields, both technology and insurance.
Those are two worlds that are rapidly coming together. Technology is ready to transform the industry, across underwriting, placement, claims and much else. But those looking to securely embrace new ways of working need partners familiar with the old. Because if you want help to get where you’re going, it helps to have someone who understands where you’re starting from.
Find out about Intersys’ specialist cyber-resilient IT services for the (re)insurance sector. We help brokers, (re)insurers, MGAs and adjacent organisations deliver IT infrastructure that protects critical assets, maintains business continuity and helps teams work smarter.