German actuarial specialists Meyerthole Siems Kohlruss (MSK) and E + S Rück, the German unit of global reinsurance giant Hannover Re, are partnering to develop tools to assist with pricing of cyber risks.
In a two-pronged partnership, the pair are developing a pricing model for cyber risk underwriting as well as data tools to help in creating actuarially sound rates in cyber risk insurance.
The cyber insurance pricing model will be used to help E + S Rück sell cyber re/insurance products, with a focus on the corporate market using the developed cyber pricing model and a rate calculator for insurers selling cyber coverage to SME’s.
At the same time, the partnership will see MSK and Hannover Re’s German arm collecting cyber data in order to build up a data pool on cyber risks, to aid in setting actuarially sound rates.
“We help our cedants with the introduction of a cyber product for SMEs on the basis of an actuarially based tariff,” commented Karsten Faber, Head of E + S Rück and Hannover Re’s Managing Director for Germany.
MSK will utilise its relevant prior experience to assist in creating the cyber pricing tools and data. Since 2002, the actuarial consulting firm has successfully launched several data pool projects. The company also has a number of rating tools it has developed in the past.
Onnen Siems, CEO of Meyerthole Siems Kohlruss (MSK), explained that there is significant uncertainty in the calculation of risk-adequate premiums for cyber insurance and reinsurance.
“MSK will provide a solid foundation with its extensive project experience,” he said.