With cyber insurance being one of the fastest growing lines of insurance coverage to emerge, there are still a large number of traditional reinsurers who are yet to see cyber as a key area of growth for them, until recently.
According to Pascal Millaire, Chief Executive Officer of CyberCube, there are said to be three factors that are driving the prediction that more traditional reinsurance organisations will start offering meaningful cyber reinsurance capacity in 2024.
In the company’s Cyber Predictions report for 2024, Millaire highlighted how cyber insurance analytics modeling has matured substantially.
Following the release of Portfolio Manager Version 5 by CyberCube earlier this year, Millaire noted that the business has had many years of iteration on the modeling of cyber catastrophe risk and more consensus than ever before about the scenarios that matter.
Morover, an analysis of 94% of real-world systemic events and near misses over the last three years shows a high or medium fit in the CyberCube catalog.
However, when this is combined with CyberCube’s attritional loss model being 1% point off the National Association of Insurance Commissioners (NAIC) filing rates, cyber modeling is said to be at a stage that “inspires confidence amongst reinsurers, at a time when many nat cat models are being deeply questioned.”
Another factor that is driving the prediction is that new tools are said to be allowing reinsurers to better understand the quality of various cedent portfolios.
Thirdly, Millaire highlighted how it is “increasingly clear cyber is a risk that is too big to ignore.”
With more Internet of Things (IoT) devices, data and AI being rolled out across more sectors, it is very clear that cyber is reconfiguring the nature of risks in the global economy.
Millaire notes that as reinsurance firms look at traditional lines of insurance being transformed by internet-connected risk, as well as the opportunity to participate in a rich new line of insurance, those organisations that were hesitant to explore the waters of cyber will increasingly see the imperative to do so.
Lastly, Millaire explains that as new reinsurers start offering cyber in meaningful ways for the first time in 2024, this will contribute “many new trickles” of capacity, rather than a flood of reinsurance.
“Over time, 2024 will lay the groundwork for future growth of capital, supporting the future of what could become one of the largest lines of P&C reinsurance.”
