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The cyber insurance and reinsurance market is complex. A vast majority of companies that are affected by cyber threats are still working out how best to manage cyber risk. While the percentage of companies that use cyber insurance is difficult to quantify and many companies that experienced a cyber attack have a coverage gap. The reinsurance market is working through how best to manage liquidity if GWP increase as predicted.
This makes the enclosed report on the adoption of ILS for cyber of interest. It uses the experience of natural disaster catastrophic loss as a benchmark to evaluate the impact of a catastrophic cyber attack on the cyber ILS market. Stating that a catastrophic cyber event would provide opportunities for investors to better understand and evaluate (have belief) risk models.
One has commented many times about the cyber ILS market and the dangers today of ILS products that focus on cyber. Lloyds of London’s Q1 2024 market message is well work watching and the evaluation by Kirsten Mitchell-Wallace of cybersecurity risk management at Lloyds and the need to go back to the fundamentals of risk management in developing cyber risk models. (https://lnkd.in/dEzMFDWj).
In ones opinion the cyber insurance market is to immature to economically underwrite products to support clients manage cyber risk. One has always suggested that the cyber insurance industry (and D&O) needs to evaluate the effects and opportunities that cyber regulation will have on cyber and D&O insurance. Cyber regulation is the biggest risk transfer tool the industry has to help its clients manage cyber risk, develop cyber risk models and take the industry back to basics for the evaluation of cyber risk. That can only be a good thing. After all who wants a catastrophic cyber event, if the United Health hack is anything to go by.
@Thaddeus Dziekanowski Brian D. McCarthy
Veritas GRC Lockton Lloyd’s Market Association
#cybersecurity #cyberriskmanagement #cyberregulation #cyberinsurance
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