Pepper and Embedded Insurance Partner on Cyber Insurance for Consumers, SMBs

Consumers and small-to-midsize businesses (SMBs) that use Internet of Things (IoT) devices to manage smart homes and businesses have a new option for obtain cyber insurance — providing their service providers are using the Pepper IoT Platform-as-a-Service (PaaS) back end. The service, announced on June 28, allows users to opt for a minimum of $10,000 per device in coverage from their providers for each device without requiring them to submit cyber insurance applications. The insurance is available either as an add-on at the time of the sale from the service provider, or it can be purchased later.

Pepper CEO Scott Ford says that consumers currently have very few options to obtain comprehensive cyber insurance for their IoT devices. While individuals have some options to reduce their risk and become better candidates for cyber insurance, many do not know how to do so. Offering an actual cyber insurance policy — not just a rider to an existing home policy that might offer nominal coverage — provides real and measurable coverage for common cyber threats, he says.

While the consumer market is the primary target for this partnership, Ford says that SMBs that use surveillance cameras and similar IoT devices also can benefit from this low-cost cyber insurance alternative.

Consumers Need Simple

Toby Coleridge, chief product officer at Embedded Insurance (EI), which is Pepper's cyber insurance broker, says the process of obtaining a policy through his company — without the need to fill out long applications that must be processed through underwriting — is easy for the clients to understand. EI's policies are underwritten by Chubb, the top-ranking cyber insurance carrier in 2023.

Coleridge notes that these are real cyber insurance policies that are specifically designed to be simple to purchase. Unlike corporate cyber insurance policies — where rates and terms are based on an organization's existing cybersecurity controls, audits, penetration tests of networks, and negotiations with corporate boards, corporate counsels, and CISOs — these policies are off-the-shelf packages that are preconfigured and priced accordingly, much like purchasing an automobile policy.

"We haven't needed to look at putting in restrictions," he adds. "That's the complexity of SMB insurance versus the residential policy that we're using here. Ultimately, the whole point of this is to keep it as simple as possible."

Among the coverages offered are cyber financial fraud, cyber extortion (including ransomware coverage up to the policy's limits), identity theft, data restoration, device replacement, and cyber bullying. Policies are available starting at $5.28 per month per device. For higher limits, such as coverage up to $100,000 per device, the price could rise to $20 per device per month or more.

Coleridge sees personal cyber insurance as a growing market going forward. As social engineering attacks increase against individuals, the need for personal cyber insurance will increase as well, he says. "It's about protecting you against some of those threats that most consumers are probably naive to today," he adds.

Security and Insurance Are Natural Partners

Ford notes that in 2022 State Farm Insurance invested some $1.2 billion into the electronic alarm-monitoring security firm ADT, adding that the insurer could offer better rates to customers who proactively add security controls and thus become lower insurance risks. Similarly, Pepper late last year acquired Comcast business unit Notion, a smart property monitoring sensor system and app that enables home and small-business owners to monitor and reduce loss from costly property damage. In both cases, the acquired firms provide the new parent with on-the-ground intelligence that lowers the user's vulnerability to losses.

The partnership between Pepper and Embedded Insurance is similar to others. For example, earlier this month in the enterprise space, security operations center (SOC) and XDR vendor Arctic Wolf announced a similar program with cyber insurance carrier Cysurance. The Arctic Wolf model is designed for much larger enterprises that can support a SOC, as well as other enterprise-class security controls. As part of the program, Arctic Wolf customers can purchase up to $1 million worth of cyber insurance at an 80% discount from standard market rates.