Advisen

Coalition: Underwriting cyber like an adversary

By Chad Hemenway, Advisen

Coalition, launched December 5, said it has the capability to quote, bind and issue a customized cyber insurance policy online in less than 5 minutes by looking at companies like a hacker.

“We are looking at companies like a real-life adversary would for all the things we might use to hack them,” added Joshua Motta, co-founder and CEO of Coalition—described as a provider of a full suite of cybersecurity products for small and midsize businesses, including cyber and tech E&O insurance of up to $10 million, backed by Swiss Re Corporate Solutions and Argo.

Coalition’s software “thinks like an underwriter without any underwriters,” said Motta, who started his first company at 13 years old. Microsoft subsequently bought the software Motta created and then hired Motta at age 15. After high school, Motta joined a hacking unit of the CIA where he learned “how offense works” as a component to cybersecurity.

“It is hard to underscore how different of a perspective that is,” Motta said. “A vast majority of the technology and cybersecurity world has only ever played defense, and they are building products that only know how to play defense. They’ve never seen the side of offense; they don’t know what the playbook looks like.”

Motta said he and co-founder John Hering have experience looking at cyber risk from this perspective, which Motta said allows Coalition to quantify and price cyber risk in an innovative way. The company spent a lot of time with actuarial teams at Swiss Re and Argo to outline the mathematical approach to analyzing tens of thousands of data points about an individual insured as brokers use Coalition’s website to answer several questions about the insured.

Coalition is not primarily interested in an insured’s industry or how many employees it has. “We care about the technologies you are using,” Motta said. But for every underwriting element, Coalition is able to create a security tool for the insured.

Free-of-charge security applications are available, for instance, to notify an insured when an employee’s credentials are breached. There is also an anti-ransomware app, and to protect companies from denial-of-service attacks—there’s an app for that developed by Cloudflare, one of Motta’s most recent business ventures.

“We are looking to democratize access to tools businesses need for their security,” Motta said. “These tools may be too complicated or expensive otherwise.”

Speaking of cost, Motta said its model allows it to offer limits as low as $25,000. Because many business owners run their businesses on a month-to-month basis, Coalition provides options to pay for insurance in the same way. Plus, coverage is customizable—even property and business interruption (BI) is available. Not only that, but if insureds use the apps offered to them, they can be incentivized.

“If a business turns on the DDoS app, we will reduce the BI waiting period to one hour,” Motta said.

“The way cyber is handled now, once a claim is sorted out all the details about how and why something happened never gets fed back into the underwriting process, risk engineering or risk management techniques,” Motta said. “At Coalition, if you were breached because of bad shopping-cart software, we will integrate this information into the underwriting process and we can build an app or tool to fix it.”

Motta said Coalition melds Silicon Valley engineers with cyber intelligence and insurance experts. Shawn Ram, formerly head of the technology practices at Crystal & Co and Aon, is now leading insurance at Coalition. Claims is being led by Catherine Lyle, former head of cyber claims at Swiss Re. Matt Ahrens, a founding team member at Crypsis, is now at Coalition as a security engineer.

Managing editor Chad Hemenway can be reached at chemenway@advisen.com