New player pioneers ‘active cyber insurance’ for UK market

Coalition, a US-headquartered pioneer of so-called active insurance is pledging to shake-up the UK market for cyber insurance as it opens a London office.

Backed by a multi-year capacity agreement with Allianz Global Corporate and Speciality, Coalition’s risk appetite encompasses firms with up to £1bn turnover, although it primarily bills itself as a specialist in small and medium-sized enterprises (SMEs). Its products will be distributed via independent insurance brokers.

It says active insurance comprises an entirely new approach to help SMEs manage their cyber risk, marrying traditional managed cyber security tools, monitoring, 24/7 forensics and incident response with broad insurance coverage.

It believes this model offers SMEs better protection from cyber incidents and claims that its American policyholders make substantially fewer cyber claims than others.

Coalition’s head of insurance for the UK, Tom Draper, a former technology and cyber practice leader at Gallagher, said: “We aim to democratise cyber services and protection for UK businesses and help brokers show their clients the real value of active insurance.

“With our tech-enabled approach to underwriting, we offer brokers the ability to quote and bind in seconds. We assess each risk on its merits and profile during that time, not just industry standards. This speed of service, combined with sophisticated cyber protection and comprehensive insurance protection, is a powerful offer to the UK market.”

A recent report compiled by Coalition found that the average cost of a cyber incident claim for a small business owner increased to $139,000 (£120,900) during the first six months of 2022, 58% higher than the same period in 2021.

It said it observed a decrease in the frequency of ransomware attacks in particular, and a decline in the ransoms demanded by cyber criminal gangs, adding that in incidents that did result in a payment, it had managed to help victims negotiate down to an average of 20% of the initial demand.

It should be noted that making any payment to a ransomware gang is extremely inadvisable, but it must be acknowledged that for many organisations there is often little alternative.

It also found its policyholders made 50% fewer claims compared to the broader market, and the severity of the claims that were made also declined during the period, with 45% resolved at no cost.

“Across industries, we continue to see high-profile attacks targeting organisations with weak or exposed infrastructure – which has become exacerbated by today’s remote working culture and companies’ dependence on third-party vendors,” said Catherine Lyle, Coalition’s head of claims.

“Small businesses are especially vulnerable because they often lack resources. For these businesses, avoiding downtime and disruption is essential, and they must understand that Active Insurance is accessible.”