Cyber ILS – Cyber Insurance-Linked Securities news

The recent CrowdStrike related global IT outage event has shown that it is essential to have specialised knowledge about cyber risks in order to effectively invest in cyber catastrophe bonds, insurance-linked securities (ILS) and reinsurance focused asset manager Twelve Capital has said.

Specialist re/insurer Beazley said this morning that it aims to develop a “vibrant” cyber reinsurance market with the help of insurance-linked securities (ILS) investors, while also noting that the recent CrowdStrike IT outage has shown its cyber underwriting was resilient to such a loss event.

According to reinsurance broker Guy Carpenter, CrowdStrike is not a particularly significant cyber catastrophe event and only represents a “Kitty Cat”, or mid-sized catastrophe loss, while the broker estimates industry losses will be between $300 million and $1 billion.

Lockton Re, the reinsurance arm of the independent broking group, has hired Theo Norris from Gallagher Re to become its first Head of Cyber ILS.

Property Claim Services (PCS), the unit of Verisk that is a provider of industry loss estimates and loss data globally, has designated the recent CrowdStrike linked global IT outage as a PCS Cyber Catastrophe Loss Event, meaning industry insured losses are expected to reach above US $250 million, Artemis has learned.

The US cyber insurance industry loss from the recent CrowdStrike related IT outage is expected to come in below $1 billion, according to specialist insurer Coalition, with the company saying its modelling suggests a lower bound of $270 million or even lower, while the upper-bound is $960 million.

The recent global IT systems outage caused by the CrowdStrike event can serve to build more confidence in cyber catastrophe bonds, as some of the biggest questions posed about this new segment of insurance-linked securities (ILS) were about how losses from a major cyber event would manifest, Jonathan Hatzor, CEO of Parametrix told us.

CyberCube, a specialist modelling firm for cyber risks and exposures, has estimated that insurance industry losses from the CrowdStrike linked global IT outage for the standalone cyber insurance market will be between $400 million and $1.5 billion.

Parametrix, a specialist in parametric cloud downtime cyber insurance and reinsurance protection, has issued an estimate for the insurance industry loss caused by the CrowdStrike linked global IT outage, saying it anticipates insured losses falling in a range of $540 million to $1.08 billion.

Analysts at Berenberg have said today that because of the nature of specialty re/insurer Beazley’s cyber book of business, they do not feel its losses from the CrowdStrike linked IT outage will be significant and expect them to come in well below where the PoleStar Re cyber catastrophe bonds attach.