Pandemic could be ‘blueprint’ for what could happen in cyber: Swiss Re


The demand for cyber insurance is rising, and not before time, according to Anthony Cordonnier, head of cyber product management at Swiss Re.

Speaking to Intelligent Insurer, Cordonnier said the chief factor behind the increase in demand is a hike in frequency and severity of ransomware.

“We’re hearing about large ransom demands in the market. We’re seeing those in various underwriting portfolios. That is clearly a cause for concern and it’s led to a hardening of the primary market since the latter part of 2019, and has been accelerating since.

“It started with almost anecdotal rate increases of single digits and now we’re talking to our clients more and more ahead of the renewal; we find it’s going to be higher as you get closer to year-end,” he explained.

Cordonnier added that in the cyber market, in terms of reinsurance, the performance of cyber products has led reinsurers to consider decreasing ceiling commissions in proportional business.

“We’ve seen that during our smaller mid-year renewals, although cyber is mainly a January 1 renewal line of business in the most part.

“I would add that we’ve seen the most hardening for aggregate stop loss covers. In that instance, it’s about supply and demand—there isn’t enough supply for what our clients are seeking to purchase.”

From a business point of view, there has been a huge increase in demand, Cordonnier confirmed. But, he added: “What has been surprising is the continuing increase in demand in the original product.

“Frankly, across the market, the concern was that some people saw it as optional or a luxury product, maybe a less established product. People felt they needed to insure a shop or a building because of fire, but perhaps cyber not as much.

“I would put the change in this thinking down to ransomware.”

“COVID-19 losses are impacting the lines of business where perhaps no-one considered a global pandemic as an exposure.” Anthony Cordonnier, Swiss Re

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Cordonnier pointed to a change in awareness around the risk, saying “If you look at cyber, when it made the headlines previously it was about privacy breaches. It was large blue chip companies dealing with class actions predominantly in the US and it was harder for smaller business to relate to that, and for good reason.

“But now, when you see those ransomware attacks being publicised—and it’s not in the niche press, it’s on BBC news—small businesses can relate to that. So demand has continued.”

He said the business might see “a bit of downtick” as the world experiences the potential economic downturn, but it’s hard to tell—“and so far it’s been continuing”.

In terms of Swiss Re’s products, Cordonnier said the product itself is a response to the challenges of this world, “so I don’t think you can expect any particular changes to it”.

“We simply need to be there to keep providing the product, that’s a success story I would say.

“If you look at the pandemic in terms of underwriting, it has maybe been a bit of a blueprint for what could happen in cyber. COVID-19 losses are impacting the lines of business where perhaps no-one considered a global pandemic as an exposure,” he warned.

“As someone who works in cyber, the pandemic ticks all the worries that we have in terms of what we call silent cyber as a shortcut.

“There are clearly exposures out there that could impact us, in the original insurance market and in reinsurance. We take the view that we are here to help our clients manage that and create that discipline where there shouldn’t be any silent exposure.

“It should be either covered or excluded both on primary and reinsurance,” he concluded.

Swiss Re, Cyber, Insurance, Reinsurance, Anthony Cordonnier, Europe

Intelligent Insurer