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Illustration: Sarah Grillo/Axios

All companies are potential victims of cyber attacks, and buying insurance is one way many are trying to manage that risk.

Why it matters: Companies hit by attacks are exposed to incredible costs — Equifax lost $4 billion in stock market value in just a week — so companies are increasingly looking beyond traditional safety nets to avoid financial ruin.

How it works: Firms interested in obtaining cybersecurity insurance can go through an intermediary firm that helps them assess their cyber risk with a score, similar to a credit score. Some firms work on behalf of insurers to assess risk in potential client companies.

  • Some of these firms simultaneously offer services to help mitigate companies’ risk or respond to cyber incidents.
  • The market is already seeing some coordination, like the jointly offered Allianz-Aon-Apple-Cisco cybersecurity insurance package that simultaneously assesses risk and offers insurance and incident response.
  • CyberCube CEO Pascal Millaire tells Axios his company thinks about pricing by multiplying frequency by severity. In other words, how often attacks can be expected in that industry, how often they are successful, and what the operational and financial impacts could be.

Where things get murky: The cybersecurity insurance marketplace is young and fragmented. Not all formulas for premiums are equal, and there’s no consensus in the market about how to price them.

  • The result: 26% of U.S. companies reported this year they don’t believe their cyber insurer priced their premium based on an accurate analysis of their risk, per a survey run by Ovum and commissioned by FICO.
  • That’s in part because actuarial data isn’t available yet, which results in a patchwork of assessments.
  • Pricing cyber insurance premiums can be even more challenging than underwriting other premiums because cyberattacks can happen at any time, regardless of geography or seasonality. And other disasters warranting insurance, like floods and fires, exhibit more predictable behavior than hackers.

There’s a reason traditional insurance is successful, Srinivas Mukkamala, CEO and Co-Founder of RiskSense, tells Axios: “They can put a model and put a number behind it.” For now, most pricing in cyber insurance inevitably lags behind cyberthreats.

The big picture: “The key is this isn’t just an IT thing, it’s not just a tech company thing. It’s everyone,” says Jason Hogg, Aon’s CEO of Cyber Solutions. As more internet-of-things devices come online, the attack surface will continue to grow, so the need for cybersecurity insurance will likely grow, too.

  • That goes for individuals as well. “If you look out 5, 10, 15 years, it’s hard to imagine any line of insurance not being impacted in some way, shape or form…by internet-connected risk,” Millaire said.
  • High net-worth individuals are already buying cybersecurity insurance from Aon, Hogg tells Axios.

What to watch: Some insurance providers, like cybersecurity insurance startup At-Bay, require companies to meet a baseline of security before even allowing them to purchase insurance. That could encourage better security practices to begin with.

  • Yes, but: Once companies reveal the security thresholds for companies, threat actors have a head start on exploiting them.

Go deeper

Senate Democrats demand answers on FBI's Kavanaugh probe

Photographer: Andrew Harrer/Bloomberg via Getty Images

Senate Democrats are demanding that the FBI hand over "all records and communications" related to the FBI tip line set up to investigate Supreme Court Justice Brett Kavanaugh when he was a nominee in 2018.

Why it matters: The ask comes after the FBI revealed it received more than 4,500 tips about Kavanaugh when he was awaiting Senate confirmation amid sexual assault allegations. Only the most "relevant" of these tips were forwarded to the Trump White House.

Chip relief on the horizon

Illustration: Sarah Grillo

Good news: The worst of the chip supply crunch might be near.

The other side: Here's the bad news... CEOs say chips totally flowing like normal is still a ways out.

Trump ally Tom Barrack pays $250 million bond to get out of jail

Tom Barrack speaking at a symposium in Tokyo in March 2019. Photo: Kiyoshi Ota/Bloomberg via Getty Images

Real estate investor Tom Barrack paid a federal court a bond of $250 million to get out of jail on Friday while awaiting trial after he was arrested and charged with acting as an unregistered foreign agent for the United Arab Emirates earlier this week, AP reports.

Driving the news: A federal judge also ordered Barrack, a longtime ally of former President Trump and chair of his inaugural committee, to wear a GPS monitoring bracelet at all times and barred him from transferring funds overseas.