Industry must be proactive for cyber to succeed
The re/insurance industry needs to play its part in driving forward the implementation of regulation relating to cyber risks if effective products transferring the risk around this threat are to be developed.
That was the view of a number of industry leaders speaking at a reinsurance panel discussion held at the PCI annual meeting. They said that while cyber represents a huge area of opportunity, it is also an area where re/insurers must be sensible and not jump in and underwrite risks they do not fully understand.
Nancy Bewlay, Swiss Re’s head of casualty underwriting for US and Canada, said that there is a responsibility on the insurance sector not only to provide products on cyber, but to cooperate with governments as well to set cyber regulation.
“As a re/insurer, jurisdiction matters, and coverage changes depending on where you go in the US,” she said.
“We need to do a better job of aggregating the information we currently have to model an entire economic effect. Innovation is there, but we cannot do it independent of regulation—it’s up to us to influence what our government can control.”
Andrew Marcell, CEO of US Operations at Guy Carpenter, said that reinsurers need to run to risk, not away from it, and be especially helpful in deploying capital.
Tad Montross, president, chairman and CEO of Gen Re, added that there is no definition of cyber reinsurance.
“While we can be hard on the industry, I feel that we’ve been pretty responsive in developing a set of cyber responses in the last few years,” he said.
“Part of the problem with the liability side of cyber is that there has not been an appetite at some premium levels that have been available to purchase.”
Montross added that the industry must be careful not to confuse innovation with a market-clearing price, as the exposure increases daily at a geometric rate.
Bryon Ehrhart, CEO of Aon Benfield Americas, added: “Severity on the cost is important, and there is definitely a growing need for it, I just don’t know how the reinsurers and insurers are going to come up with a product that’s cheap enough for people to buy.”
