19 January 2016 Insurance

Lloyd’s, AIR and RMS collaborate on cyber risk data

Lloyd’s has announced that a set of common core data requirements for cyber risks has been agreed through collaboration with modelling firms AIR Worldwide and RMS and the Cambridge Centre of Risk Studies.

Both AIR and the RMS/Cambridge team have agreed to highlight common elements when they publish their data schemes later this month and, most importantly, each has agreed to use similar terminology and precise definitions.

The Cyber Exposure Data Schema is ‘open standard’ data scheme will provide the insurance industry with a systematic and uniform way to capture cyber exposure data and manage cyber accumulation risk, according to RMS.

Andrew Coburn, senior vice president, RMS, said: “Having a standardised way to capture cyber insurance exposures will provide a much-needed framework for the market to grow its cyber capacity safely.

“We worked with a development consortium of leading international cyber insurance practitioners to develop the RMS schema, passing it through a series of rigorous consultation reviews. Our Cyber Exposure Data Schema is one component of our four-part cyber risk management framework being released in full at the beginning of February.”

Tom Bolt, director of performance management, Lloyd’s, added: “Cyber insurance is an important new area of coverage and it is essential that we have good quality standardised data to track exposures.

“I am delighted that the RMS/Cambridge team and AIR, in consultation with the Lloyd’s Market Association, have worked with us to propose standard definitions for some common data.  I have written to major brokers to ask them to endeavour to provide this data to Lloyd’s underwriters.”

Bolt also said that the cyber insurance industry is showing real innovation and that it demonstrates the ability of insurers to develop policies to cover modern, complex risks.

“Due to the growing importance of this risk class, quality standardised exposure data is critical for increased levels of insurance coverage and better risk modelling,” he added.

“Models for natural catastrophe risks are well developed in the re/insurance industry and the data requirements are relatively standardised.  But in comparison, models for cyber risks are still developing and need the industry to work collectively so that risk can accurately be calculated. Lloyd’s is pleased to have worked with AIR, RMS and the Cambridge Centre for Risk Studies to progress this issue.”

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