cyber insurance

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.

The issuance of Beazley’s $45 million Cairney cyber catastrophe bond, and Hannover Re’s $100 million, Stone Ridge Asset Management-backed retrocession cyber quota share arrangement, “represent the potential for a broader reinsurance source for the risk,” according to Fitch Ratings.

Expansion of the insurance-linked securities (ILS) asset class into other lines of business such as cyber risks is not likely to be a case of a reallocation away from property, rather Artex Capital Solutions executives believe that incremental growth of non-cat ILS is to be expected.

Cyber reinsurance capacity needs to grow threefold by 2030 to support the cyber insurance segment in fulfilling its potential, and focus is needed to maintain momentum in making third-party capital a key component of the cyber market’s capital structure, broker Howden has said.