Active cyber insurance vital for effective risk management: Motta, Coalition

Joshua Motta, Founder and CEO of Coalition, advocates for the necessity of active cyber insurance due to the shortcomings of traditional approaches, highlighted by erratic rate fluctuations and the inadequate readiness of organisations facing escalating cyber risks.

Speaking at the Marsh McLennan Rising Professionals’ Forum, Motta pointed to the volatile rate fluctuations observed in the cyber insurance market, suggesting, “Typically, when we see rollercoasters like this in insurance, it suggests that the participants don’t know what they’re doing – which might actually be a valid criticism.”

He also highlighted organisations’ unpreparedness to handle cyber threats: “They are almost completely unprepared and do not have the balance sheets, in some cases, to survive a cyber event.”

Motta underscored the insurance sector’s struggle to adapt to the digital business landscape, noting how digital transformation has drastically changed the world while insurance practices have lagged behind.

Consequently, he stressed the necessity of moving away from traditional insurance approaches to effectively manage cyber risks.

Motta asserted, “In my humble opinion, you can’t underwrite much less manage cyber risk in the same way as traditional insurance risk.

“We don’t want to go on this rollercoaster anymore, and so our vision of the future is active insurance.”

He countered claims that there isn’t enough data to understand cyber risk and its potential aggregation, stating, “There has never been more data to interpret cyber risk, to underwrite how it aggregates than there is today. It’s just that most insurers don’t have it, and certainly don’t use it.”

Motta elaborated, “Cyber risk can be quantified. It can be predicted, and it can be actively managed. We don’t have to wait around like a traditional insurance company for a claim to be filed, we can actually go out and do something about it.”

He described active insurance as a process involving ongoing assessment of an organisation’s vulnerability to cyber attacks, proactive identification and remediation of weaknesses, and real-time monitoring to respond immediately to incidents.

This approach fosters a more engaged and dynamic relationship between insurers and insureds, ensuring a deeper understanding and proactive management of cyber risks.