Despite its challenges and its ever changing nature, Swiss Re’s CUO P&C Re, Gianfranco Lot, is convinced that the industry will be able to provide significant capacity to cyber risks.
Cyber insurance is a growing line, and just like natural catastrophes, it requires a lot of modelling, Swiss Re stated during its recent 2023 Media Dialogue.
As it is still in an infancy state as a line of business, the reinsurer stated, it takes a cautious approach to it as there is not enough data yet to be able to determine the risk accumulation with certainty.
“It’s challenging and requires trying to get a lot of investment into getting more clarity around it. What data is needed? What scenarios can we think about? And can we get a group around those scenarios?” said Lot.
“The accumulation topic is really important. The line is growing and evolving, it’s a challenge,” he added. “But we’re convinced that we will find a way to provide significant capacity in the cyberspace going forward.
“We need clarity on what we’re covering and what scenarios would aggregate or not under the different cyber policies all around the world. Currently the US represents the biggest market in the cyberspace. So, currently, there’s also limited geographic diversification.”
Anne Lohbeck, Chief Underwriting Officer Specialty, added: “I spoke to somebody recently who was part of the industry in the 70s and 80s and he spoke about cat modelling at the time, when that was really in its infancy.
“When there were a number of sort of shock events associated with large nat-cats that then led to the creation of wordings, languages and structures that were used later and that greatly advanced modelling.”
She concluded: “I think that’s sort of the parallel we need to think about right now. That cyber needs to go through what nat cat has gone through a generation ago, and I think if we follow along that path, then there’s clearly a trajectory.”
