cyber insurance

The alternative risk transfer techniques adopted by the insurance-linked securities (ILS) market, as well as the depth of capacity that can be provided by the capital markets, are both needed to help to tackle the “Too big to insure” world of cyber risk, according to a study.

Cyber is widely regarded as the fastest growing insured risk globally, but a lack of adequate modelling capabilities and meaningful historical data means that too much cyber coverage growth too soon, would be credit-negative for insurers and reinsurers, according to Fitch Ratings.

Risk modelling firm RMS has released a new cyber risk accumulation management tool and reporting framework as it seeks to encourage insurance, reinsurance and the ILS markets to become more comfortable putting out larger limits to cover cyber risk exposures.

A newly launched cyber risk exposure data standard could put in place the groundwork for the development of parameters and metrics to be used for future triggers for cyber risk ILS or reinsurance transactions.

The insurance-linked securities (ILS) market can be a future provider of capacity to help to transfer the enormous exposures presented by cyber risks, according to risk modelling firm AIR Worldwide which has announced a new collaboration to build an advanced cyber risk model.

The massive exposures from cyber risk will eventually need to be dealt with by the insurance and reinsurance market with a hybrid approach, creating reinsurance products that leverage both traditional and capital market or ILS practices, according to PwC.

The rising threat of cyber attacks to economies and businesses across the globe can be mitigated through public and private sector relationships, utilising the benefits of alternative risk transfer solutions such as catastrophe bonds, according to Z/Yen Group Limited.

Lately the press is awash with stories about cyber risk, cyber insurance and the threat posed to companies by hackers, malware and exploits. The need for cyber insurance and reinsurance protection is clear, but with some suggesting $1 billion policies are required would the capacity be available?