Modeling tools lets insurers write data breach risk ‘with more confidence,’ Willis Re says

Willis Group Holdings plc announced Tuesday its reinsurance division released a modeling tool intended to let insurance carriers quantify the exposure of their portfolio to data breaches.

The London-based commercial insurance broker said Willis Re’s new tool – dubbed PRISM-Re – was developed in collaboration with Willis Retail’s cyber team and actuaries from Willis Risk & Analytics.

“Our model helps provide greater objectivity and will allow insurers to underwrite this risk with more confidence and to therefore write more and/or higher limits,” stated Mark Synnott, executive vice president of Willis Re, in a release. “It may also give those not currently providing coverage the confidence to enter into this line.”

PRISM-Re gives insurance carriers “an objective analysis of the susceptibility to data breach events across the insurer’s portfolio,” Willis Re says. “Based upon the latest exposure data, the tool estimates the frequency of data breaches and the potential severity of insured losses arising from those events.

The model also employs a ‘common shock’ methodology to encompass the possibility of contagion behavior, whereby numerous breaches could take place systemically across a single industry sector or related sectors.”

In the release, Synnott referred to three recent data breaches:

•leaked documents, including scripts of unreleased films, from Sony Pictures Entertainment;

•credit and debit card information from customers of Home Depot; and

•credit and debit card information from customers of Target.

“With recent high profile data breaches including those of Sony, Target and Home Depot, it is an area that is seeing a huge upsurge in demand. In a largely mature and static insurance market, cyber represents one of the key avenues for growth.”