Moody’s RMS has announced the launch of its Cyber Industry Steering Group to develop industry initiatives that respond to the growth of the global cyber insurance market.
According to Moody’s RMS, leading market participants Munich Re and Gallagher Re, and global cyber risk management leader Bitsight have joined the steering group, “with other industry partners from across the insurance ecosystem to follow.”
The catastrophe risk modeling and solutions company noted that the group has been formed to “tackle the current constraints to growth in the cyber insurance market”, which includes a lack of standardisation across different market functions, and a lack of confidence and insufficient comfort across insurance boardrooms, investors, and the regulatory community around cyber risk.
“The participants share a vital interest in growing the cyber insurance market, and together they will advise and steer the group in developing and supporting a long-term strategy that increases risk analytics transparency and advances the industry’s view of cyber risk,” Moody’s RMS said.
The firm added that achieving a greater understanding of cyber risk will help provide the reassurance and confidence required by the industry to seize growth opportunities. Moody’s RMS has thus announced significant increases in its cyber risk analytics investment to help realise the market’s growth potential.
Michael Steel, General Manager, Moody’s RMS, commented, “There is a clear need and a significant opportunity to accelerate growth in the global cyber underwriting market. However, there are many legitimate concerns around risk, regulation, and the lack of standardization.
“We are therefore committing to significantly increase our investment in cyber modeling, as we see this effort as central in our role to help develop new markets for the industry’s growth.
“The introduction of Moody’s RMS Cyber Industry Steering Group represents a significant step forward in helping focus these investments and bring together industry-wide efforts to solve challenges and ultimately create a unified currency of risk across underwriting, aggregation, and risk management.”
Dr Jürgen Reinhart, Chief Cyber Underwriter, Munich Re, said, “Cyber insurance is a dynamically developing line of business, projected to grow rapidly in the coming years. It is vital that this growth be underpinned by reliable and widely accepted models, both to foster a sustainable market and to ensure further capacity.
“Initiatives like these play a significant role in improving industry-wide understanding of cyber accumulation risk and underwriting quality, while also strengthening stakeholder confidence. Munich Re is proud to collaborate closely with other insurers and vendors on this initiative as we seek to meet the demands of the growing market.”
Tom Wakefield, Global CEO, Gallagher Re, noted, “Cyber represents both a systemic risk and huge opportunity for our industry. In a market likely to always be capital-constrained due to the sheer scale of future demand for risk transfer, our biggest challenge is attracting enough capital to support clients’ growth in this area.
“Gallagher Re’s dedicated cyber team spends an incredible amount of time educating potential investors and capacity providers, getting them comfortable with the risks, and addressing correlation concerns to bring in that additional capital.
“So, by combining the expertise and insight of leading cyber (re)insurers, brokers, and catastrophe risk modelers in an industry steering group, we’ll produce a powerful mechanism for advancing the wider industry’s view of cyber risk. We are proud to partner with Moody’s RMS on this important initiative.”
Derek Vadala, Chief Risk Officer, Bitsight, added, “Strong partnerships are essential to successfully managing cyber risk because it is a complex, persistent, and asymmetric threat for organizations of all industries and sizes.
“Bitsight is excited to further expand its partnership with Moody’s RMS by joining other leaders in the insurance industry in helping manage this critical, exponential risk.
“As the creator of the cyber security ratings market, Bitsight helps organizations by leveraging its vast set of cyber exposure data and its proven cyber risk models which provide correlation to cybersecurity incidents. We look forward to working together in order to help address this important global issue.”