附近上门

As network and data cybersecurity solutions continue to proliferate in the industry, some investors are eyeing a different type of cyber solution for the new year, one that gives its customers peace of mind, not firewalls and endpoint tools.

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Although investment in cyber insurance鈥攚hich can protect companies from losses and liability incurred from attacks and data breaches鈥攎ade up a small percentage of the nearly $6.5 billion invested in cybersecurity in the U.S. last year, those who watch the area think that could start to change soon, perhaps even this year.

鈥淚 think that there’s three reasons why the timing is right now,鈥� said , managing director at . 鈥淥ne is that the number of risks and attacks has increased to a level such that it is so commonplace. Businesses ask, 鈥楬ow do I insure myself against that risk?鈥欌��

In addition, Sherman said he believes some of the regulatory issues that have pained the sector have been smoothed, and the infrastructure and technology is now there for the sector to see an uptick in investment as cyber threats continue to dominate headlines.

鈥淲e’re likely to make another insurance-related investment,鈥� said Sherman, pointing out that last January his firm led a $32 million Series B in , which helps customers deal with cyber risk. 鈥淧rimarily because we see this opportunity continuing to touch many different markets in the insurance space.鈥�

Slow to move

Aside from Corvus, few others in the U.S. cyber insurance and risk market took in money in 2020. Late last year, San Francisco-based closed a $34 million Series C, nine months after closing its Series B and bringing its total funding raised in 2020 to $74 million. San Francisco-based 鈥攃onsidered by most to be the largest player in the space鈥攕ecured $90 million in May.

In late 2019, Denver-based raised a $40 million Series D.

That slow trickle of investment is despite reinsurance giant Munich Re estimating the global cyber insurance market last year to be worth more than $7 billion, including $5.3 billion in the U.S alone. It expects the global market to reach more than $20 billion by 2025.

鈥淚t鈥檚 still a pretty young industry, so you have to give it time,鈥� said , managing director at . 鈥淚t is growing fast, but it is in a sector like insurance that traditionally is slow to change.鈥�

Kinsella said as with many things in the cybersecurity world, winners in insurance will have to get an edge in distribution by selling policies through vendors who also may be selling other companies鈥� tools to help protect actual IT infrastructure.

Other issues around cyber insurance involve the proper assessment of risk, what losses most policies will cover, and finding reinsurers who want to be in the space.

鈥淭here鈥檚 so much unknown around the risk,鈥� said , managing director of . 鈥淚 wonder if we are thinking about it in the right way.鈥�

Nevertheless, Butler said he wishes he had jumped on some earlier opportunities to invest in the space.

鈥淚 do think there鈥檚 an opportunity there,鈥� said Butler, who added that selling policies with security tools as add-ons could be a way to gain traction in the market.

Winners in the space

, founding director of San Francisco-based financial advisory firm , said he definitely sees progress in the space, pointing out that large companies such as Coalition and even small startups like Pleasanton, California-based have secured investments.

鈥淚 think there is a ton of money to be made there,鈥� Boukouris said, commenting on the market.

He added that while insurance and data analytics companies likely will be interested in the cyber insurance space, he does see early movers continuing to lead the way as they find ways to automate and optimize the insurance process.

Sherman agrees, saying winning companies will be those able to build an end-to-end insurance platform, from the customer side to the broker side to the analytics and underwriting side, Sherman said.

鈥淭here’s going to be some opportunities to build some big public companies in this area,鈥� he said.

鈥淚 actually think that the winning companies will probably go public, and then the companies that are good 鈥� but maybe not as strong 鈥� will help to support some of the existing insurance companies as a way of them strategically expanding into this business,鈥� he added.

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