The world’s dependence on online technology has grown so great, it may surpass the global insurance industry’s capacity to fully protect it. That was the verdict of senior insurance professionals interviewed by CyberCube CEO Pascal Millaire for a new series of NetDiligence webinars.
In the interviews, Albert Benchimol, CEO and President of AXIS Capital, told Millaire that a public-private partnership would be necessary to manage the world’s largest cyber aggregation events.
Benchimol said: “My personal view is that ultimately, for the largest aggregation events, we’re probably going to need some sort of private-public partnership, whether it’s a Pool Re or a Pandemic Re of some sort, or a Cyber Pandemic Re.”
Benchimol continued: “I don’t know that there is enough capital in the industry to be able to fully support the amount of economic damage. COVID-19 was a really good glimpse into how much exposure you have. Imagine if we shut down all of our IT systems for a month. How much economic value would we as a society have lost? I would argue that the way we think about cyber accumulation is COVID on steroids. Because COVID is a natural occurrence. A virus doesn’t aim for one country or another.”
Benchimol emphasized that his views were personal and didn’t represent an industry perspective.
Munich Re estimates it has a 10% share of a roughly $7 billion cyber insurance market. Stefan Golling, Chief Underwriter for Munich Re, said there was a role for alternative capital to support the cyber insurance market. In his interview with Millaire, he said: “There are risks involved in cyber that are maybe so systemic that the capacity of the market could come to its limits.
“Maybe we see the first signals that the alternative capital is showing some interest in cyber products, and I’m sure, in a couple of years, there will be more. We certainly also have to talk about private-public partnerships to simply overall increase the capital base provided to the cyber product.”
Sean Ringsted, Chief Risk Officer and Chief Digital Officer for Chubb, also called for discussions to take place. He said: “The insurance industry can and will do more because our clients demand that. But at some point, I think you are entering a time and space where there need to be discussions around public-private partnerships to be able to address some of the really, really significant tail risk that could potentially arise in some of the scenarios.”
The NetDiligence webinars featuring Pascal Millaire of CyberCube are available at https://www.youtube.com/channel/UC_YetjIwaMTnWQ8hVobSSYQ/.
CyberCube is the market leader in cyber analytics for the insurance industry.