Singapore’s finance minister has announced the launch of the world’s first commercial cyber risk insurance pool, which will be backed by both traditional reinsurance and insurance-linked securities (ILS).
The cyber risk insurance pool has been developed and set up in collaboration with the Singapore Reinsurers’ Association and globally renowned cyber specialist Peter Hacker, who was previously reinsurance broker Ed’s Group Chief Innovation Officer but left the company to focus on his work and research at cyber specialist Distinction.Global.
The Singapore cyber risk pool will commit up to US $1 billion of capacity to the cyber insurance problem, bringing together both traditional insurance and insurance-linked securities (ILS) markets to provide bespoke cyber coverage, Minister for Finance Heng Swee Keat said during a speech at the 15th Singapore International Reinsurance Conference today.
He explained that twenty insurance companies have already expressed an interest in participating in this risk pool.
The goal of the cyber risk pool will be to provide coverage to corporates in ASEAN and Asia so that they can be better protected against cyber-related losses.
“The cyber risk pool reflects Singapore’s standing as a specialty insurance hub, and our commitment to driving forward-looking insurance solutions to tackle new and emerging risks. I encourage you to consider participating in this joint effort, and to work together to develop better risk models to price cyber risks appropriately. With proper pricing, more corporates will be encouraged to take-up cyber risk protection,” Minister Heng Swee Keat explained.
Singapore is attempting to position itself as a global leader in cyber risk with this venture, as well as in reinsurance capacity provision as the use of both traditional and alternative sources is innovative for a risk pooling facility.
The facility should prove very attractive to cyber underwriters looking to expand into Asia, as the diversification the pool will offer will help to minimise concentration risks.
The cyber risk pool will also help to expand the availability of cyber insurance in Asia and the region, which can only be a positive step for corporates which currently carry significant uninsured cyber exposure.
Minister said Heng Swee Keat, “As Asia continues to transform into a knowledge-centred, technology-based and innovation-driven economy, new risks will continue to emerge. This presents new opportunities for the insurance sector to create value. At the same time, new solutions are needed to address age-old catastrophe risks. I am confident that more can be done, and will be done.”
