Resilience Cyber Insurance Solutions has completed a Series D funding round, raising $100 million as startup cyber insurance companies continue to attract investment.
The company uses artificial intelligence to analyze policyholders’ systems and determine risk profiles based on where cyberattacks could succeed, which it then feeds into its underwriting.
Companies such as Resilience, which loosely fall under the label of “insurtechs,” tend not to be traditional direct insurers. They effectively lease underwriting capacity from partner carriers to write policies using their own methodologies.
Resilience’s funding was led by the company’s existing capacity provider Intact Insurance Specialty Solutions’ venture capital unit, with participation from long-term investor Lightspeed Venture Partners. The new investment brings Resilience’s current funding to more than $225 million.
“The biggest thing is we’re starting to see the signs of this working. Our clients are resilient, they’re not paying the ransomware losses,” Vishaal Hariprasad, the company’s chief executive, said.
While insurtechs have seen mixed success in other lines such as auto insurance, cyber-focused companies have consistently attracted substantial funding from venture-capital firms and other investors in recent years. Coalition raised $250 million in a June 2022 Series F round, while Cowbell Cyber raised $100 million in a March 2022 Series B. Other funding rounds for insurtechs include $185 million in a June 2021 Series D round for At-Bay, and $100 million for Corvus Insurance Holdings in a March 2021 Series C. All say they use AI to some degree within their products.
Resilience’s successful funding also comes as some cybersecurity companies are struggling to fill rounds, or cutting staff to deal with lowered valuations after years of bumper investment.
Hariprasad said being disciplined in seeking funding, with its last round being an $80 million Series C in November 2021, has allowed the company to continue to focus on developing its technology and avoid chasing revenue to satisfy inflated valuations.
The company plans to use the investment to expand its global offices and invest further in its technology, such as proprietary algorithms that quantify a company’s cyber risk in potential losses.
It also wants to expand further into improving cybersecurity and measuring gaps in defenses. Arif Janmohamed, a partner at Lightspeed Ventures, said that financial and technical risks are often too separated at companies when it comes to cybersecurity.
“If you look at cyber, it’s siloed. You have chief information security officers focused on buying products, you have chief financial officers focused on reducing risk,” Janmohamed said.
Insurers have largely pared back losses from cyber policies that ballooned in 2020 and 2021, along with a sharp rise in cybercrime. This has been accomplished through tougher underwriting standards that have sometimes made insurance difficult to obtain, either in part or at all, for companies and municipalities of all sizes.
Hariprasad said while insurers have developed decent cyber products, society has become more digital, and cybersecurity risk has become a core business risk, so cyber insurance must evolve further to reflect that.
The strength of a company’s cyber defenses and its ability to recover must factor into insurance products, which are often designed just for risk transfer without integrating those issues, he said. Insurance products must be more closely based on a customer’s actual systems data and technical information, to be more effective, he said.
“That’s what we’ve been building towards, well beyond just being an insurance company, and this round of funding allows us to really accelerate into that,” he said.