QBE Insurance Group has agreed a multi-year deal to licence the RMS Cyber Accumulation Management System, with catastrophe risk management firm RMS. The risk modeller explains that the agreement will allow the insurer’s cyber business to model a variety of cyber catastrophe events.
The growing threat of cyber attacks across the world has the potential to impact a range of policies, and not just those specific to cyber, highlighting the need for insurers and reinsurers to be able to model a range of potential cyber catastrophes in order to determine the potential impact of a wide-scale, systemic attack.
The utilisation of the RMS Cyber Accumulation Management System by QBE, under a new multi-year agreement, will enable the insurer to do just this, helping the company to identify and manage any potential cyber risk accumulations in its portfolios, which in turn should support the continued growth of QBE’s cyber operations.
Christer Pehrson, Managing Director of Client Development at RMS, said; “Accumulations of cyber risk are hugely complex and not geographically limited, unlike perils such as hurricanes or earthquakes. The web of potential impacts and losses is enormous and insurers are increasingly concerned about the growing accumulation of risks within their cyber insurance business. The RMS Cyber Accumulation Management System will enable QBE to understand and control this accumulation to maximize the opportunity provided by cyber as a new line of business.”
RMS explains that so far there have been no cyber catastrophes, and the resulting lack of historical insight makes it even more difficult for insurers to determine their capacity levels for such an exposure. However, the RMS Cyber Accumulation Management System provides insurers with valuable insights into extreme cyber events. Without this insight insurers must assume a conservative view of cyber risk as they are unable to set the Probable Maximum Loss (PML) for cyber catastrophes, which can limit growth potential, explains RMS.
“Cyber has the potential to trigger a correlated loss across many accounts. Therefore, a deep understanding of its systemic risk and the consequent impact on our interconnected world is critical to managing the risk. QBE’s objective is to manage cyber exposures within a well-defined risk appetite, similar to established practices for property accumulations. The RMS Cyber Accumulation Management System helps us address the significant challenge of aggregate cyber risk and we are excited about its future roadmap,” said Eric Letourneau, Senior Vice President (SVP) and Group Head of Catastrophe Modelling at QBE.
The RMS Cyber Accumulation Management System was developed in partnership with a range of cyber insurers and the University of Cambridge’s Centre for Risk Studies, and is now utilised by more than 20 cyber insurers.