Confidence key to solving cyber demand dilemma

Cyber cover continues to be a significant topic of conversations at the reinsurance rendezvous in Monaco this week and the growing use of the alternative capital is seen as a key to unlocking the market to meet the increased demand from businesses of all sizes.

Amid calls for greater clarity in the type of structures of cyber coverage having been made at the event Chris Methven, head of growth, CyberCube told Emergingrisks he was already seeing clear trends in the conversations he has been having in the principality.

“Many of the cyber reinsurers we speak with are approaching this renewal season with a sense of cautious optimism, with the results of actions taken by primary insurers over the last 24 months starting to yield demonstrable improvements,” he said. “We are seeing renewed interest in the cyber reinsurance market from previously inactive traditional reinsurers, and from other capital market participants.

“We believe additional reinsurance capacity is needed to really unlock the potential of the market, from traditional reinsurers, establishing a retro market and from ILS capital markets. Without it, there is concern that industry growth will be constrained.”

As such Methven said his meeting schedule this year has seen a clear shift. Where in the past it has been an opportunity to meet with brokers, clients and reinsurers to understand the thinking and strategies for the year ahead, this week the profiler of those he will meet have been sharply different.

“This year, I have been meeting with reinsurers and third-party capital providers in Monte Carlo to explore what can be done to provide this visibility and bring more new capital into the cyber insurance market,” he explained.

Methven said that the reinsurers are beginning to see the benefit fit the work that the primary markets have been undertaking around risk management with their clients, and with those risk management benefits starting to filtre through reinsurers are keen to ensure they have a full understanding fit he4 risks they are being asked to assume.

“Insurers being able to provide a more complete picture of cyber exposures will be a prerequisite to bringing these new sources of capital into the market,” Methven said. “The investors will need to be comfortable that they understand the risks and the way the covers are structured.