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Cowbell - The Future of Adaptive Cyber Insurance

  • Writer: Yuval Reizer
    Yuval Reizer
  • May 12, 2024
  • 6 min read

Introduction:


In today's interconnected world, where digital threats are everywhere and the protection of sensitive data is paramount, the role of cybersecurity companies has become increasingly vital.


Among the prominent players in this landscape stands Cowbell Insurance, an emerging force in the cyber security small and medium-sized business market.


Cowbell Insurance is a tech-driven insurance company that specializes in providing small and medium-sized businesses (SMBs) with innovative, customizable, and affordable insurance solutions.


Market Introduction:


The cyber insurance market refers to the sector within the insurance industry that deals specifically with providing coverage against losses and damages resulting from cyber-related incidents and risks, such as data breaches, cyberattacks, ransomware, business interruption due to cyber incidents, network security failures, and other digital risks.


The cyber insurance market has experienced significant growth in recent years due to the increasing frequency and severity of cyber threats faced by organizations across various industries.


According to Forbes, the percentage of ransomware attacks, malware designed to deny a user or organization access to files on their computer, that hit organizations jumped to 66% in 2021, with a 29% year-over-year growth. These rising cyber-attacks impacted the organization's operating ability, which is expected to boost market growth.


In 2022, the average cost of a data breach reached US$4.4 million, a 13% increase since 2020. That average cost is also expected to reach $5 million per incident in 2023. The cost of cyber insurance in the US can vary depending on factors such as company size, industry, revenue, level of coverage, and cybersecurity measures in place. Premiums can range from $500 to over $5,000 annually, with average estimates at around $1,600 per year for $1 million of coverage.


Global cyber insurance market, 2018 and 2020, with forecast for 2025 ($B), Information By Statista
Global cyber insurance market, 2018 and 2020, with forecast for 2025 ($B), Information By Statista

Cowbell's unique features provide personalized insights and recommendations to improve an organization's security posture and optimize premiums based on their specific risk exposures. These differences highlight Cowbell Cyber's focus on customization, continuous improvement of clients' cybersecurity posture, and its unique model of engaging with policyholders to minimize risk and ensure their coverages evolve with emerging threats.


Cowbell's products:

Cowbell's comprehensive suite of solutions encompasses cyber insurance and risk management, providing clients with proactive protection and financial coverage against cyber threats such as email scams, ransomware attacks, social engineering, and more.

Cowbell offers two main insurance options: 

  1. Business with up to 100 million dollars in revenue

  2. Business with up to 250M dollars in revenue.


Cowbell's unique approach leverages advanced AI-driven risk assessment models to analyze organizations' cybersecurity postures and tailor insurance policies to their specific needs. To help tailor insurance for each business, Cowbell uses a self-developed tool called Cowbell Factors.


Every Cowbell Factor is a rating index ranging from 20 to 80 that contributes to evaluating business cyber risk and, therefore, appropriate insurance coverage. The Cowbell Cyber platform guides businesses to select an insurance policy to match their insurable security threats. Unlike traditional methods, Cowbell Factors apply continuous observation to map exposure and impact.


Cowbell applies artificial intelligence and machine learning algorithms to normalize collected signals, model risks, and compile Cowbell Factors using 1000+ data points and risk signals from a variety of sources such as public databases, third-party vendors, proprietary external scanners, dark web intelligence, and compliance information.


Cowbell Factors show not only each business's risk ratings but also the industry aggregate factors (average), using the overall risk pool of that business class. This is vital since bad actors usually target companies with a lower cybersecurity standard than their peers. Higher Cowbell Factors than the aggregate show a better risk profile and insurability, which can provide their customers with a better rate of safety.


To bring their customers insights from Cowbell factors, Cowbell also provides a service called Cowbell Insights. Cowbell Insights are recommendations they provide to help businesses remediate cybersecurity weaknesses and improve the organization's risk profile. They are accessible to policyholders and non-policyholders alike.


The insights are generated from Cowbell's continuous risk assessment process and add details about the Cowbell factors. While Cowbell Factors provide a relative rating against Cowbell's risk pool, Cowbell Insights are unique to each organization and are updated continuously. Each insight shows the level of security priority (High, Medium, Low), the impacted Cowbell Factor(s), and what to do to remediate the identified security weakness.


Cowbell Factors - How It Works
Cowbell Factors - How It Works
As businesses address the insights and take steps to remediate their impact, the insights will be removed from the list of identified cyber risks. Furthermore, Cowbell Factors will be recalculated to reflect the improvement in cyber risk.

Combining these two special features, Cowbell offers something they refer to as the Cowbell cycle:


  • Insure - With the broker, determine insurable threats and their financial impacts to develop a cyber insurance policy custom-designed to suit the business risk profile.


  • Improve -  Each business receives continuous risk assessments and recommendations to mitigate risk and optimize premiums via Cowbell Insights and the Cowbell Risk Engineering team.


  • Respond - Cowbell's security and insurance experts are on call and always ready to help the business with a full range of immediate post-incident recovery services.


  • Assess – The business can use Cowbell Factor to quantify the business risk exposure and learn exactly how much and what types of coverage the business needs.


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Founders, Finance & Partners:

Cowbell Insurance was co-founded by Jack Kudale, Trent C. & Rajeev Gupta in 2019. Jack Kudale serves as its CEO. With over 30 years of experience in global enterprise technology, Jack Kudale has successfully led and grown several startups and established companies in the fields of DevOps, cybersecurity, cloud, data integration, APM, IT operations analytics, and mobile broadband. He has also advised and invested in early-stage startups and served as a board member and mentor for several organizations.


Rajeev Gupta serves as the CPO, and Trent Cooksley as COO, both with rich experience including sales, engineering, value-based solution selling, product management, and an extensive background in software architecture, design, and development of large-scale enterprise applications.


Jack Kudale, Founder, CEO & Chairman of Cowbell
Jack Kudale, Founder, CEO & Chairman of Cowbell

In 2021, Cowbell secured a $20 million Series A funding round led by Brewer Lane Ventures with participation from Pivot Investment Partners, Avanta Ventures, Markel, and existing investors. Following this, in 2022, amidst increasing cyberattack concerns, Cowbell Cyber successfully raised a substantial $100 million in Series B funding, led by Anthemis Group with participation from Permira, Pruven Capital, Nyca Partners, Viola FinTech (HUJI VC Club partner), among all existing investors, bringing its total raised funds to $123.5 million.


Continuing its upward trajectory, the company secured $25M in new funding in 2023, with the round led by Prosperity7 Ventures. This demonstrated sustained investor confidence and a commitment to securing the cyber well-being of SMEs.


72% of SMEs without cyber insurance say that a major cyberattack could destroy their business. Cowbell is closing the insurability gap for this critically important market, achieving 2.5x premium growth in 2022 to insure SMEs against evolving cyber threats. Cowbell is backed by 20 prominent leading global reinsurance partners (insurance for insurance companies) and serves SMEs in 50 US states, the District of Columbia, and the United Kingdom.


Cowbell Specialty Insurance Company (CSIC), Cowbell's wholly owned subsidiary, has earned a Financial Stability Rating (FSR) of A, Exceptional, from Demotech.In the third quarter of 2023, CBInsights recognized Cowbell as one of the top 100 private fintech companies globally and the only Cyber Insurance provider on its annual Fintech 100 list.


In early 2023, Amazon Web Services (AWS) named Cowbell to its Cyber Insurance Partner Initiative as a testament to its deep expertise in serving SME customers with cyber insurance coverage tailored to their needs. Cowbell also partnered with Microsoft and Ingram Micro to provide a seamless transition to Microsoft 365.


Cowbell now offers free cloud migration services to businesses in the US and UK, providing its policyholders with the ability to enhance their security posture, reduce exposure to cyber threats, and earn a 5% premium credit at renewal by implementing essential security measures, including multi-factor authentication and Microsoft Defender for Microsoft 365. This collaboration simultaneously fosters the adoption of cyber insurance within the SME market.



About Viola Group:

Founded in 2000, Viola Group is one of the leading Israeli VCs with a management portfolio exceeding $5 billion. The group comprises five distinct investment branches: Viola Ventures, which targets early-stage startups; Viola Credit, which focuses on growth and venture lending; Viola Growth, which is dedicated to technology-centered growth capital and buyout initiatives; and Viola Partners and Viola FinTech. Viola is headquartered in Herzliya, Israel, and has notable portfolio companies, including Cowbell, Similarweb, Payoneer, ironSource, and many more.



About Prosperity7 Ventures:

Prosperity7 Ventures is a $1B venture capital growth fund of Aramco Ventures, a subsidiary of Aramco, the world's leading integrated energy and chemicals company. They back highly scalable companies across the industry landscape, including Enterprise Tech, Fintech, Deeptech & AI, B2B, B2C, and Medtech. The fund's name derives from "Prosperity Well," the seventh oil well drilled in Saudi Arabia and the first to strike commercial oil, paving the way to prosperity. Bringing forward this pioneering history, Prosperity7 invests globally with a long-term view in breakthrough technologies and transformational business models that bring prosperity and positive impacts on a vast scale.



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