cyber reinsurance

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.

Reflecting the seriousness of the CrowdStrike related global IT outage, leading cyber insurer Beazley has provided an update to the market saying that it does not expect any change to its combined ratio guidance after this event.

The CrowdStrike IT outage incident shows the need for a more granular understanding of coverage under cyber reinsurance portfolios and catastrophe bonds, but also demonstrates the importance of continued development of these instruments, as they provide critical coverage to the cyber insurance market.

Cyber catastrophe bonds have come into focus after a global IT outage caused by a CrowdStrike service update resulted in millions of computers running critical services going offline, raising questions surrounding cyber loss accumulation and aggregation risks, and highlighting some uncertainties over exactly what cyber cat bonds cover.

Parametrix, a specialist in parametric cloud downtime cyber insurance and reinsurance protection, has secured a $50 million cover for a US retailer, with the assistance of Aon, Howden and with a range of re/insurers backing the deal.

While cyber insurance pricing seems to have levelled off in 2023, rating agency AM Best noted that more can be done to attract capital to the segment, including through the provision of greater clarity on cyber risks that are considered systemic.

There is “considerable” room for growth in the cyber catastrophe bond market, as cyber insurers and reinsurers get increasingly comfortable with event-based excess-of-loss coverage options and use of quota shares in the cyber reinsurance space reduces, broking group Howden has said.

With the cyber insurance market size projected to increase in the near future, members of the Neuberger Berman ILS team have said that insurance-linked securities (ILS) will “likely play a crucial role” in providing additional capital to support said growth.

Property Claim Services (PCS), the provider of industry loss estimates and loss data globally and a unit of Verisk, has designated two cyber attacks as PCS Cyber Catastrophe Loss Events, meaning they are each expected to result in more than US $250 million of industry insured losses, Artemis has learned.

Parametrix, a specialist in cloud downtime insurance protection, has launched Parametrix Analytics, a new service allowing re/insurers to quantify, manage, and transfer cloud risks with “unprecedented” accuracy.