Cyber reinsurance is likely to become an increasingly critical area of growth for the Bermuda market, which will play a key role in the development of the coverage, according to Konrad Rentrup, President and Chief Executive Officer at Hannover Re Bermuda.
“I can only stress how important this line is for the Bermuda market and how important Bermuda will be in providing cover,” Rentrup told Reinsurance News.
“The Bermuda reinsurance market has always been innovative and provided solutions,” he explained.
“I am quite optimistic it will develop a product providing cover for the cyber losses resulting from a catastrophe-like event. Bermuda is not only a market where such tool can be developed but can provide the needed capacity.”
The CEO noted that Bermuda remains the place to be for new companies and new innovative products to launch due to the speed offered by its flexible regulatory environment.
This quality will offer a significant advantage for companies designing products to address the uncertain nature of cyber protection, according to Rentrup.
“It’s an evolving risk, it’s changing every day,” he said. “Probably no one can say that we know exactly how the exposure is building up … The attacks you saw two years ago, you won’t see tomorrow anymore, because they will be structured differently.”
Chief Underwriting Officer Dirk Hasselkuss was also present for the discussion, and offered some thoughts on what the industry must do to address the risks of silent cyber exposure.
“We need a much clearer separation between the products that offer affirmative cyber and products that have potential exposure from silent cyber,” he told us.
“For affirmative cyber, you have at least a clear understanding of what you are covering, what you are not covering and a handle on aggregation. The grey field is silent cyber.”
“Both the insurance market and the reinsurance market need to be more specific in defining and separating the two,” Hasselkuss continued.
He added that he was surprised the primary insurance market had not reacted more strongly to events like NotPetya and others, where in some instances two insurance towers have been hit by the same event, for example the traditional property program as well as the cyber specific cover.
“Our industry is always open to creating new and refining existing products. We obviously want to grow our market,” Hasselkuss said.
“There will be some trials and errors and some painful loss experiences along the way, but generally, I think the industry is well advised to develop new lines of business and products in general,” he concluded.
In addition to becoming an increasingly important concern for Bermuda, cyber is also likely to become a growing book for Hannover Re in future, Rentrup stated.
“How big it will become overall is a little bit hard to predict,” he said. “Nevertheless, for Hannover Re it is already an important line. The overall share is still quite small, but it is growing every year.”