Business assets are now almost exclusively intangible yet “most organisations continue to protect themselves the same way they did in 1975”, cyber specialist Coalition’s CEO Josh Motta says. 

 Speaking to delegates at the Marsh McLennan Rising Professionals’ Global Forum, Mr Motta said recent cyber insurance rate fluctuations suggest “participants don’t know what they're doing”. 

“We need a new type of cyber insurance, a new category of insurance, as the traditional insurance approach is clearly not working,” he said. 

“Most of the property and casualty industry is focused on the byproducts of the last industrial revolution. 

“That’s how the industry evolved, covering mostly tangible things from fairly well-understood perils. The amount of cyber risk organisations today are accepting is enormous. They are almost completely unprepared and do not have the balance sheets, in some cases, to survive a cyber event.” 

Fewer than 1 million organisations have standalone cyber insurance policies in the US and European Union, where there are 60 million companies. 

Mr Motta says the industry ”can't underwrite, much less manage, cyber risk in the same way as traditional insurance risk. Digital transformation has made the world we once knew completely unrecognisable and yet the world of insurance remains totally recognisable.” 

Cyber risk should be quantified and predicted, he says, recommending risk managers assess and fix vulnerability to attacks, and monitor live data. 

"In probably 99% of cases, when a customer applies for cyber insurance with us, we know more about their cyber risk than they do,” he said. 

“If you can reverse information asymmetry, you can do something very rare in insurance, which is positively select for risk.” 

San Francisco-based cyber specialist Coalition was founded by Mr Motta and launched in Australia in November.