Nephila Capital, the largest manager of mainly catastrophe and weather insurance linked securities and reinsurance linked assets, has lined up as one of the reinsurers supporting a technology-led cyber insurance company named Cowbell Cyber, signalling a step in the direction of specialty lines underwriting.
Cowbell Cyber is an insurtech that leverages artificial intelligence technologies to deliver a cyber insurance product for small to medium businesses.
The insurtech start-up has expanded with the launch of Cowbell Prime 100, a cyber insurance product offering sold through insurance agents and which can deliver cyber policies that have limited of up to $5 million to customers.
It’s a novel approach to cyber insurance, leveraging advanced technology such as artificial intelligence (AI) (machine learning and deep learning) to help insureds gain greater insight into their risk exposure, as a result increasing their insurability and better managing the potential for losses.
While the cyber insurance start-up itself is interesting, to us the fact Nephila Capital is acting as part of Cowbell Cyber’s reinsurance panel is more so.
It’s the first time Nephila has been linked with actively underwriting any cyber reinsurance coverage and so marks a step outside of the ILS fund managers long-held staples of global catastrophe and weather linked risks.
But it’s not completely surprising to see, as Nephila has been looking at areas of potential expansion and we understand from sources that certain specialty lines of insurance and reinsurance business are on the cards for the company.
We also understand that these newer classes of risk, for Nephila, aren’t being underwritten for its existing core ILS funds, which remain focused on catastrophe, weather and climate related insurance and reinsurance exposures. Rather they are underwritten outside of that, elsewhere within the Nephila infrastructure.
We understand that Nephila has plans that certain specialty classes of reinsurance business, such as this one of cyber, could be underwritten through its growing Lloyd’s platform, where it now has its own managing agency and so a platform ripe for exploring growth into new risks and perils.
It’s no surprise to learn that the cyber insurance start-up Nephila backs has an advanced view on risk ratings and applies a continuous approach to monitoring insureds risk exposures and also global cyber threats.
Through continuous risk assessment and underwriting, Cowbell Cyber seeks to innovate across underwriting, loss control and claims, delivering comprehensive cyber insurance coverage (including breach/liability) with a focus on really knowing the risk of the individual policyholder as well as the cyber threat landscape.
Cowbell acts as a cyber insurance MGA, so what it needs is quality infrastructure and reinsurance paper and it’s unsurprising to see that the company counts other major players as backers alongside Nephila.
It’s new product, the Cowbell Prime 100, provides policyholders an A.M. Best ‘A’-Rated admitted policy backed by InsurTech development platform company Boost Insurance (for which Nephila provides a reinsurance facility) and global reinsurance partners including Markel Global Reinsurance Company, Renaissance Re Holdings, and Nephila Capital.
Hence it seems the reinsurance access is through the Boost Insurance platform, a company that launched in late 2017, with backing from ILS fund manager Nephila Capital, its fronting partner State National and some top VC’s, aiming to help InsurTech start-ups through the often painful process of getting started in the risk business and provide them access to all-important risk-bearing capital.
Cowbell aims to reinvent how cyber underwriting takes place and also redefine the way data on risks is shared across policyholders, agents and reinsurers, to help improve the understanding of the risks and so the efficiency of its products.
That’s an attractive prospect for a reinsurance capital provider looking to dip its toes in the cyber underwriting waters and for Nephila working with Cowbell Cyber will provide a valuable learning experience and access to a new risk, while working with one of the most advanced and technology-led providers of coverage.