“We need to find new capacity.”
Just five words, spoken by Ian Newman, global head of Cyber at Gallagher Re, at this week’s Zywave Cyber Risk Insights Conference in London, but they go to the heart of the matter for the cyber (re)insurance market at present.
Indeed, how to attract different forms of capital into the cyber (re)insurance space, whether that be from Lloyd’s syndicates, Bermudian companies, sidecars or others, was a key issue for panellists. As was pointed out time and again, this is a systemic class and one which is capital intensive. Attracting capital, and doing it quickly, is a huge challenge to be overcome.
For some, we are already close to the limit. To quote Chris Storer, head of the Cyber Centre of Excellence, Global Clients, North America at Munich Re: “It will only get harder to access new capacity. There are natural limits on what we can offer and there will come a point in the not too distant future where reinsurers will have reached their risk tolerance.”
Well, one certainly hopes not. The cyber (re)insurance market has come an awful long way in recent years, and the painful lessons of recent cyber-attacks -especially where ransomware is concerned – continue to reverberate across the market. But I’ve a gut feeling that, as dramatic as the increase in both the frequency and severity of cyber-attacks has been in recent years, there is a lot more to come. Ransomware is bad enough, but you can be sure there will even more sophisticated and malicious ways of targeting business from determined cyber-criminals to come.
Maybe not for the largest corporations, who might find their own ways to manage the emerging cyber risk without recourse to insurance protection, but for small-medium sized enterprises of all shapes and sizes there will a huge demand to cyber protection in the years to come. Does our market really not have the necessary intellectual capacity and risk appetite to rise to the challenge of addressing these risks? Similar challenges have been faced in the past – and overcome – by the property market and the financial lines sector. Come on, cyber!
Editor, Emerging Risks