The recent launch of Delta Insurance Singapore, a sister company to Delta Insurance New Zealand, introduced the first cyber, technology and financial lines Lloyd’s Coverholder in the country. We sit down with Mr Eugene Cheong, its Managing Director, to find out more about its tech focus and unique approach to cyber insurance.
By Chia Wan Fen
Delta Insurance is determined to do things differently and change the way people think about cyber insurance via its risk management package. This involves pre-loss services offered to the insured, so the client can seek advice from the company’s line-up of experts including consultants, lawyers and technology firms. Mr Cheong believes that such services will change the tendency for clients to use an insurance policy only when triggered by events.
Value-added risk management
To him, awareness of cyber insurance is already prevalent in the market, but buying behaviour has not quite taken off. Areas where clients still need more education are the high operational costs of cyber security. These include costs to comply with regulations and dealing with spillover effects of an attack, such as notification costs, fines and penalties, repair of reputation. Most don’t know that just notifying a single data subject of a breach is estimated to cost around S$2 —amounting to millions for a company dealing with a lot of individuals’ data. Thus, many clients are not aware of the potential impact to their business—until they are hit.
Perhaps cyber insurance needs to be “re-pitched” to buyers, and this is what Delta Insurance is trying to do. “The traditional insurance policy is reactive in nature, with clients using it only when something happenswe want to make insurance policies more tangible by building in services that can be used by our clients even in the absence of any incident. For example, they can engage our panel of experts to build up their response competency even in the absence of a breach,” he said.
He sees three key cyber risk trends. Firstly, the increasing interconnectivity of devices and systems and the Internet of Things creates numerous entry points into a singular network that increases its exposure to cyber attacks. Second, attacks are going to be more sophisticated and targets will be more diverse. This is where improved risk management, and the value-added services that come with cyber insurance could help, before attacks happen. The services will come in particularly useful for the oft-quoted doomsday scenario nowadays – a cyber attack on critical physical infrastructure, where competent service providers could step in to help mitigate loses right away.
And third, regulators will implement more and more stringent rules for companies as attacks get more advanced, so operating costs for firms will likely increase. For example, earlier this year, Australia introduced a mandatory data breach notification regime—and other regional countries will likely follow time to come.
An InsurTech firm
Delta Insurance considers itself an InsurTech firm. The group has a technology arm, DIMS Pte Ltd, which will pave the way for the company to make investments and develop new technology, as well as hold its own intellectual property going forward. The company also has its own proprietary singular underwriting system, which aims to increase operational efficiency compared with the multiple systems which traditional underwriting requires.
It also has developed a front-end platform where intermediaries can seamlessly obtain Cyber and Professional Liability quotations which will be launched next month. Not only will these help the company to be more nimble, it will also greatly help with the way business partners transact. “To get such platforms built by third parties who fully understand the insurance industry are far and few. So we decided to do it ourselves,” Mr Cheong said.
Its InsurTech identity stems from its firm entrenchment in local InsurTech activities. While the company is a member of multiple technology associations in New Zealand, the Singapore company is a founding member of InsurTech Asia Association, which was launched in the same month. Mr Cheong believes the association will be able to pull often siloed stakeholders, from regulators and venture capitalists to insurers and insurance startups together, while helping them to expand regionally if needed.
The next game changer
Mr Cheong noted that innovation in the commercial insurance segment nonetheless has not progressed as fast as consumer insurance, where technology is used to interact and transact with end users. He said that the adoption of technology in commercial underwriting is where the next insurance game changer will be.
“I’m certain there are more opportunities to use tech in the commercial insurance space. The difficulty lies in commercial products being highly technical and complex, and the algorithm will need to capture all critical information, before putting out the terms in line with risk exposure. Also at the same time, using technology to improve both back end and front end business processes,” he said. “It’s a challenge, but also an opportunity.”
The functions within the company’s proprietary platform will be launched in stages to suit market needs.
Expansion plans
The Delta Group, which was first set up in New Zealand, has ambitious plans to expand to 10 countries globally in 10 years. Mr Cheong, while not able to comment specifically on products, approaches and how Delta’s business strategy would evolve across the different markets, said that they would be “innovative”.
“One of our key focus is People so we need to find the right people on the ground to develop the space. We will be forward-looking and come up with products and solutions early, so that when a problem really hits, there’s a solution ready. Insurers have been reactive, but coming up with a product takes time and we want to develop what’s relevant for the future.” A