Cyber Risk Whitepaper from Gallagher Re

As part of IBM’s mission to improve cybersecurity incident response training and preparedness for organizations around the world, IBM is now bringing the capabilities of the Cyber Range to abroader audience through the creation of the industry first “mobile cyber range” - the IBM X-Force Cyber Tactical Operations Center (C-TOC) as seen in Central City, Ky., October 12, 2018. Photography by Nathan Morgan

Cyber is evolving rapidly as a global risk, as almost every country switches to a digital economy. Tenant farmers in Kenya or India can now buy crop insurance via smartphone app, drivers in California or Chile can buy on-demand car insurance that’s driven by telematics data, not postcodes and occupations. A hundred different online banks and payments apps compete for contactless transactions, on almost every type of service we buy. What all that means is that the crucial online links that hold this digital economy together can be hacked – or more seriously locked or hijacked- by cyber criminals. Some might even be State actors. That complicates things for insurers and brokers as they develop cyber policies that must work 24/7, even during pandemics.

With clear evidence of a capacity shortage throughout the cyber value chain, putting ever increasing pressure on underlying carriers to deploy capacity efficiently, and an unremitting cycle of increasing demand but limited supply, will we ever see another soft market in cyber again?

So says global reinsurance broker Gallagher Re in a new white paper Cyber in the 2020s: A Question of Capacity.

“While the rest of the insurance market may be talking about a hard market, cyber is undoubtedly experiencing one,” said Seb Plummer, Cyber Reinsurance Broker at Gallagher Re and one of the authors of the white paper. “So for those toying with the idea of entering or growing into the cyber market, it would be natural to question when we can expect a return to soft market conditions and see the highly attractive market dynamics evaporate.

“The principal ingredient required for softening a market is an oversupply of capacity, but cyber has to date not experienced an oversupply – if anything there has been a competitively priced shortage. The question therefore, is not even when will the capacity return, but rather: will there ever realistically be an oversupply of cyber capacity?”

Ian Newman, Global Head of Cyber at Gallagher Re, added: “As we adapt to new ways of working around the world, whether driven by the pandemic or broader industrial advances, the global economy is undergoing a quiet technological and cultural revolution. Our paper explores the response of the cyber (re)insurance market to those shifts – a market rife with opportunity based on the dynamic ability of cyber to react and adapt quickly to the changing threat landscape.

“With demand for cover surging, significant rate increases being seen across the board, and cyber as a class continuing to perform profitably despite rising attritional losses, capacity is undoubtedly under pressure. But for capital providers, the classic supply and demand imbalance that has arisen has uniquely positive consequences.”

Download the white paper here.

About alastair walker 6824 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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