Increasing demand for high quality cyber insurance is opening up attractive growth opportunities across Beazley Ireland’s specialty lines portfolio. This comes against a backdrop of stifled demand for the more traditional catastrophe exposed risk lines, Beazley said in its H1 2017 results report.
Data breach handling regulations tightening and increased awareness among businesses of cyber risk are driving demand for cyber insurance; “Regulations concerning the handling of data breaches are tightening: the long-awaited General Data Protection Regulation will come into force across the European Union next spring.
“Also, illustrations of why companies need to have protection continue, most recently with the internationally coordinated WannaCry malware attacks,” said Beazley.
To meet the market demand, Beazley is developing new cyber cover offers, such as the Beazley Breach Response product, designed for small and mid-sized businesses.
The firm has also partnered with global reinsurer Munich Re to further build both entities’ potential for cyber underwriting.
Beazley, commented that a key to underwriting cyber insurance was to recognise the potential for systemic events, “as we do in areas exposed to natural catastrophes, and seek to limit our aggregate exposure as well as purchasing substantial reinsurance.
“In cyber, as in other business areas, our risk management team, led by Andrew Pryde, works closely with our underwriters to monitor and manage aggregation risk.”
Monitoring aggregate cyber exposure has been an area brought to light since the cyber attacks such as the WannaCry ransomware demonstrated the potential for major aggregated re/insurance losses from self-propagating cyber exploits.
Estimates of the economic loss from WannaCry range from as low as $1 billion to as much as $8 billion, although insurance capacity is likely to only cover a very small proportion of the financial impact at this time.
Underwriting cyber risks has become one of the biggest emerging opportunities in re/insurance right now, and as firms like Beazley develop new products and innovate to respond to demand, realistic modelling of the systemic nature of the risk and aggregate exposures will be key to minimising risks to re/insurers.