The cyber insurance market – where are we?
Authored by Liberty
These stories have increased since the start of the Ukraine crisis. The news flow is so persistent it can be difficult to take a step back and view the market with a more rational lens. LM Re benefits from a privileged “view from the top” of this unique market as we offer cyber reinsurance with a global approach.
The latest 1/1 renewals confirmed the hardening market environment for the cyber reinsurance sector. The days of downwards pricing competition and widening coverage are long gone; ransomware, increased frequency and severity, intense regulatory scrutiny on the Western world and an ever more sophisticated threat landscape have all contributed to this change.
Global reinsurers have witnessed significant U-turns in their clients’ underwriting strategies, with capacity contractions, reduction of average line sizes, unprecedented pricing increases, implementation of sub-limits and coverage restrictions.
Cyber carriers are also starting to look towards the reinsurance market for CAT risk transfer solutions; this constitutes a new challenge for reinsurers given that defining a cyber CAT event is a complex task, due to the dynamic nature of cyber risk. In addition the ongoing Ukraine crisis has brought another unpredicted global scenario, one that will have implications for the cyber market.
Carriers are currently reviewing their war exclusions clauses, to assess their exposure. If there is one element of certainty, it is that the current hardening market will be here for the foreseeable future, considering the geopolitical, macro-economic and inherent market factors.
Market stakeholders will need to adapt and innovate to be able to continue to offer significant risk-transfer solutions. Capital markets and governments will have a role to play in the cyber market, with Insurance-linked securities already being looked at as a possible alternative source of capital. As a leading player in the cyber reinsurance market, we will ensure that we remain relevant, not only to the market and our end clients, but more importantly to the global economy.
About Liberty
Liberty Specialty Markets offers specialty and commercial insurance and reinsurance products across key UK, European, Middle East, US and other international locations.
We provide brokers and insureds with a broad range of products through both the Company and Lloyd’s markets and have over 1,700 staff in approximately 65 offices. Liberty Specialty Markets was established in September 2013 bringing together Liberty’s company, syndicate and reinsurance operations into one combined operation, composed of three business units: Commercial, Specialty, and Reinsurance (Liberty Mutual Re). This integrated approach means brokers and clients can benefit from our global reach and operating efficiencies.
Liberty Specialty Markets is part of global insurer, Liberty Mutual Insurance Group, a diversified global insurer, formed in 1912 and headquartered in Boston, Massachusetts. Liberty Mutual is the 5th largest global insurer based on 2017 gross written premium, with over 50,000 employees in 30 countries and economies around the world. Our purpose is to help people embrace today and confidently pursue tomorrow. The promise we make to our customers throughout the world is to provide protection for the unexpected, delivered with care. We achieve this by offering a full range of personal, commercial, and specialty Property & Casualty insurance coverages. Our customers’ trust has earned us the 68th spot on the Fortune 100 list of largest corporations in the U.S., based on 2017 revenue.