Exploring a new approach to cyber risk

Exploring a new approach to cyber risk | Insurance Business Canada

Exploring a new approach to cyber risk

Among the various fields of risk, cyber could be considered a frontier area, as the nature of the risk has yet to be fully understood and is evolving due to the rapid pace of technological advancements. Participants in this field can be considered explorers in their own right.

Corporate Risk and Insurance caught up with Phil Edmundson (pictured above), founder and CEO of Corvus Insurance, who shared stories about his career, how he got into the cyber risk business, and his thoughts about the industry and its trajectory.

“I had previously sold the brokerage I founded and ran for over 30 years, William Gallagher Associates, to Arthur J. Gallagher,” Edmundson said. “Since the brokerage focused on tech companies, I saw a clear void in the market for these types of smart, technological solutions. I then launched Corvus Insurance in January 2017 with my co-founder Mike Lloyd, who’s our chief product officer. The idea came to me when I saw, through first-hand experience, that technological innovations that revolutionized other industries – like fintech – had not yet reached commercial insurance.”

According to Edmundson, Corvus focuses on cyber risk, loss prevention, and mitigating adverse events using data-driven and AI-powered tools.

“As a career broker, I understand the profoundly positive impact that insurance has made on every business market,” Edmundson said. “There was an opportunity in the industry not to just cover risk, but to better prevent it. During and after my time at William Gallagher Associates, I saw that venture capitalists – and the insurance industry – craved those same kinds of revolutionizing technologies that had transformed financial services. So, Mike and I started Corvus to go after the market opportunity to create technology that helps commercial brokers be more successful and policyholders be safer.”

In early 2018, Corvus gained a US$4 million seed investment led by Bain Capital Ventures (BCV), allowing it to launch its first product, Smart Cargo Insurance. This was followed by a $10 million Series A round later that year, led by .406 Ventures and Hudson Structured Capital Management, with BCV also returning for a follow-on investment. In 2019, the company launched its Smart Tech Error & Omissions product. Corvus announced a US$33 million Series B investment in 2020, with various new and returning investors. By the end of 2020, Corvus had a US$100M annual premium run rate, capping off a year that was marked by accelerated growth for the company.

Over the past two years, Corvus has nearly doubled its employee count and brought in several key executives. It has also expanded internationally with the acquisition of Tarian Underwriting and the hiring of Oliver Delvos as head of international.

“Cyber insurance has certainly garnered a lot of attention as of late, but it’s also brought to light that it’s a powerful and much-needed service as companies increasingly realize they need and rely on the support to mitigate cyber threats,” Edmundson said. “It’s time for insurance to show its power for good and find solutions when everything else feels a bit apocalyptic. Corvus is creating a new definition of what it means to be a MGA. We empower brokers, underwriters, and policyholders with data-driven, always-on insights and adaptable policies for this new age of cybersecurity. For those three foundational stakeholders, we now actively use our data and software to solve the problems faced by our insurance and reinsurance partners. Our unique philosophy and thoughtful approach to our long-term partnerships keep us laser-focused on policy outcomes – because we succeed when they succeed. There’s a reason we have risk capital partners, not competitors.”

While Edmundson is an explorer in the realm of cyber, he is also a lover of the outdoors, as an avid birdwatcher.

“Our company name may tip you off (crows and ravens are in the genus Corvus) that I am very passionate about and find great joy in birdwatching,” he said. “I’ve gone on some incredible trips and seen beautiful species of birds over the years.”

Looking forward, Edmundson sees a continuous influx of investment in cyber risk management, due to increasingly aggregated risks.

“Concerns have grown about the aggregation of cyber risks, which have been exposed by high-profile events such SolarWinds, and the Colonial Pipeline and Kaseya ransomware attacks,” he said. “I expect to see capital providers increasingly take critical steps to address the evolving landscape by properly understanding and underwriting risk with insight and data around systemic cybersecurity metrics. Only with real-time, aggregated data, coupled with effective cyber catastrophe modeling, can providers better manage these risk aggregations. It also gives reinsurers the certainty they need to support the booming cyber insurance market. As the economy continues to digitize, the demand for cyber reinsurance capacity is only going to grow. As an industry, we can meet this demand using the same type of tools that we use for other catastrophic risk aggregations — data and modeling.”