Symantec - Insurers poised to disrupt cyber-security channels

A series of product partnerships with cyber insurance providers locally and globally is signalling that ICT security firm Symantec is preparing for what could be a major market shift.

The vendor appears to be experimenting with different models in different markets, and with good reason: in most other sectors insurers determine who gets the business of mitigating risk or repairing damage.

Cyber insurers could disrupt the market by operating in much the same way as, for example, vehicle insurers, who direct business towards approved panel-beaters, mechanic and other repairers.

As cyber insurance grows from around a US$4 billion market now to a projected US$20 billion, insurers could profoundly change the way cyber-security is bought and sold, said Pascal Millaire, Symantec’s Vice President and General Manager of Cyber Insurance.

Increasingly insurers will become “critical influencers” in buying decisions, he predicted.

“Cyber insurance is a CEO-level issue for leaders of the world’s largest insurance companies so should really be top of mind for technology vendors, cyber-security vendors and those in the channel,” Millaire said.

“When the US$4 trillion insurance industry begins moving into a new vertical or space that can have profound implications for the markets they enter.”

As the uptake of cyber insurance grows, the global US$90 billion ICT security business will increasingly be directed towards providers with strong insurance partnerships. The insurance industry could also become a competing channel for ICT security resellers.

Symantec is tackling that challenge on two broad fronts, Millaire said.

First, it is building tools for the insurance industry to help it refine its risk and actuarial models. Second, it is forming product partnerships with insurers to take bundled cyber insurance and ICT security services to market.

One such partnership, with Berkshire Hathaway Specialist Insurance in Australia and New Zealand, demonstrates how cyber insurance providers offer a new channel to market for Symantec.

Under that deal, Symantec provides both cyber-security and incident response services to policyholders, Millaire said.

The deal is one of three that illustrate how Symantec is experimenting with different models in different market spaces and regions.

But first, there are the new cyber insurance tools, being developed in association with New York-based risk specialists March & McLennan and due to be released in the Northern hemisphere summer.

Symantec Cyber Insurance, established two years ago, will be providing an analytics software platform for partner underwriters, portfolio managers, risk analysts and actuaries to calculate cyber risk using Symantec’s cyber security intelligence and data.

The service delivers underwriting intelligence, cyber catastrophe modelling and pricing analytics to help insurers better understand and mitigate the hard-to-calculate risk of cyber-security incidents.

Page Break

“What we found when we started engaging with the market is cyber insurance is a challenging item for the world’s largest insurance companies,” Millaire said.

“On the one hand cyber insurance represents one of the biggest premium growth opportunities. The line is growing exceptionally fast and penetration rates are low.

“On the other hand it is also one of the biggest risks insurers face given the lack of data, the lack of actuarial models and the lack of underwriting tools.”

Needless to say, measures such as the use of effective ICT security technologies and processes helps reduce risk in those models and therefore the cost of cyber insurance.

Then there are the other product partnerships.

Symantec’s cyber insurance partner programme promises to help insurers differentiate their cyber insurance products by bundling Symantec’s security services and products to reduce risk and assist recovery. It also helps insurer partners to market into Symantec’s installed user base.

In addition to the Berkshire Hathaway alliance, Symantec has teamed with Tokio Marine in Japan to deliver cyber insurance bundled with Norton security products to consumers.

In this model, unlike in Australia and New Zealand, it is Symantec and its channels rather than the insurer doing most of the selling.

In the US, Symantec has partnered with top-three insurer Chubb to develop a new offering for small businesses. This combines Norton for Small Business with cyber insurance.

SMBs can go online to buy, creating a one-stop-shop for both security and insurance against data breaches.

Millaire said it is estimated as many as 60 per cent of SMBs will close after such a data breach due to the “incredible costs” of recovery. These costs only increase when data-breach notification becomes mandatory as looks likely in Australia.

The product partnerships were launched in mid-2016 and are now being expanded to other locations.

“It’s our belief when clients buy cyber-security they are really looking for more holistic risk management solutions," Millaire said.

"You can either mitigate risk with cyber-security or you can transfer it through insurance. It’s our belief some of the best products will do both.”

Millaire said it is early days in a fast growing market and there are tremendous opportunities for channel partners to get involved.

Symantec is, for instance, exploring the role data-loss prevention software resellers can play in tripartite partnership arrangement with local insurers and Symantec to service clients.

“Ultimately insurers are looking for ways to differentiate their cyber insurance policies. In order to do that there are all sorts of collaborations that could be undertaken between channel partners, Symantec and the insurers to create a better and stronger value proposition.

“Insurers are looking for more ways to compete than just price.”