cyber reinsurance

Beazley is “proud” that insurance-linked securities (ILS) investors backed the “high quality” of its cyber underwriting portfolio and supported its sponsorship of a ground-breaking first cyber catastrophe bond, CEO Adrian Cox has said.

London headquartered specialty insurance and reinsurance firm Beazley has successfully secured $45 million of cyber risk reinsurance from capital market investors including insurance-linked securities (ILS) specialist Fermat Capital Management, in what is being termed the first cyber catastrophe bond, the Financial Times has reported this morning.

Global reinsurance giant Swiss Re has said this morning that the industry needs to adopt a different approach to cyber risk underwriting, while also repeating its call for the development of a cyber insurance-linked securities (ILS) marketplace.

Enhancing the terms and conditions around cyber insurance and reinsurance coverage, especially around cyber warfare and what is excluded from policies, is an important factor that can attract new capacity, including from the capital markets, Claudia Hasse of Munich Re has explained.

Cyber risk modelling specialist CyberCube has launched a set of exposure databases for cyber risk, claiming them as the first of their kind, something seen as a key pre-requisite for broader cyber insurance-linked securities (ILS) activity.

Coalition, a leading technology-focused cyber insurance company, has announced the launch of a Class 3B Bermuda based reinsurance company called Ferian Re Ltd. which is backed by third-party capital and will act as a kind of sidecar-like source of capacity to support its cyber insurance programs.

Envelop Risk, a cyber underwriting company with a data-driven approach, has announced the launch of a Capital Markets unit, as it looks to partner with insurance-linked securities (ILS) funds alongside its own reinsurance vehicle.

Many insurance-linked securities (ILS) investors remain hesitant about allocating capital to cyber insurance and reinsurance risks, which leads rating agency S&P Global to suggest growth of a cyber ILS market will likely be slow in the short to medium term.

Beazley has been investing time and effort in redesigning terms and conditions around its cyber insurance products, as it feels by better defining systemic cyber risks, it will help to give more confidence to capital to enter the sector, including from third-party or ILS investors.

The majority of insurance-linked securities (ILS) fund managers are interested in cyber re/insurance risk and are free from mandates prohibiting engagement, suggesting the ILS space is “quite ready to consume more cyber insurance risk,” according to Tom Johansmeyer, Head of PCS.