Lockton Re, the reinsurance division of global insurance brokerage and risk management company Lockton, has executed what is believed to be the first Industry Loss Warranty (ILW) transaction combining property catastrophe and cyber triggers within a single limit structure.
This innovative reinsurance structure will reportedly allow capital providers to access multiple peak risks through a single, transparent, and independently reported mechanism.
The reinsurance broker explained that the placement is designed to solve the “inherent needs of global cedants, who are looking to find economical ways to derisk their growing US Cyber exposures.”
The transaction is a result of increasing maturity of cyber industry-loss reporting, and shows how the ILW market can continue to evolve beyond traditional property-only applications.
PERILS AG, in collaboration with CyberAcuView, acted as Index Provider for cyber, and VeRisk’s PCS was used for property cat.
Tom Parcell, Chief Broking Officer, Lockton Re, Bermuda, said, “This deal reflects Lockton Re’s focus on innovation that supports our clients and builds on the breadth of products that can be traded in the market.
“As the ILW market continues to evolve, we are seeing broader demand from clients for risk solutions that look at new structures and integrated options, and we are particularly excited about the opportunity for growth in this space with more bespoke, alternative index covers for our clients.”
Theo Norris, International ILS and Cyber ILS Leader, Lockton Re Capital Markets, added, “This deal highlights trends we are seeing with the convergence of property catastrophe and cyber risk transfer, the growing maturity of industry cyber loss indices, and the development of new capital solutions for the market.
“Lockton Re Capital Markets is going one step further, establishing Catastrophe Bonds with Property and other lines of business, including cyber, across multiple tranches. The way Lockton Re is structured and our lack of internal silos means we can quickly adapt, understand, and work in teams built around clients to maximise new opportunities.”
Lockton Re expects further growth in hybrid ILW, collateralised reinsurance, and catastrophe bond solutions as buyers seek more efficient ways to access protection as cyber loss reporting continues to mature.
