cyber insurance

Demand for cyber insurance and reinsurance is expected to continue to grow in the years ahead, but with carriers seemingly at the maximum of what cyber risk they can assume, transferring some of it to the capital markets will be crucial to achieve exponential growth, according to industry experts.

Speaking this afternoon during a renewals focused panel discussion hosted by Aon’s Reinsurance Solutions, Sven Althoff, Member of the Executive Board for P&C at Hannover Re, explained that introducing event-based wordings to cyber insurance could open the doors to broader capital markets and ILS involvement.

Beazley, the London headquartered specialty insurance and reinsurance underwriter, has now added a third privately placed cyber catastrophe bond, taking its cyber cat bond coverage to $81.5 million after securing a further $16.5 million in cyber reinsurance from the capital markets through a Cairney III issuance.

This year feels like a watershed moment for the cyber insurance-linked securities (ILS) market, with tangible advances in use of ILS capital to support cyber risk underwriting, while cyber models have reached a level of maturity that promises there is much more to come, Brittany Baker of CyberCube told Artemis.

Independent reinsurance broker Lockton Re has called for cyber reinsurance to be simplified, saying that this will help to solve the capacity supply for cyber risks, while also opening up capital markets and ILS capacity avenues.

Reinsurance broker Guy Carpenter has said that, while insurance-linked securities (ILS) investors and ILS funds fear financial market correlation emerging after a widespread cyber attack event, they shouldn’t fear the risk of a “double-whammy” from the risk side and their investments in other asset classes.

Having already sponsored two privately placed catastrophe bond issuances in 2023, Adrian Cox, the CEO of Beazley, the London headquartered specialty insurance and reinsurance underwriter, said he anticipates the company tapping the capital markets for more cyber reinsurance capacity in 2024.

The cyber insurance marketplace needs the backing of robust and healthy cyber reinsurance, cyber retrocession and cyber insurance-linked securities (ILS) markets, if it is to achieve its potential, according to S&P Global Ratings.

Cyber insurance-linked securities (ILS) will be “pivotal” to the future development and health of the cyber insurance and reinsurance market, according to comments from specialist insurance-linked securities (ILS) investment manager Fermat Capital Management today.

In a new report, insurance focused investment manager Conning raises a valid point, that a nascent cyber insurance-linked securities (ILS) market may be based on fragile investor confidence, so the occurrence of a major cyber catastrophe loss could deter them before the market even has a chance to mature.