More cyber reinsurance capacity expected in 2024: CyberCube CEO

The global cyber insurance market is expected to benefit from a growing pool of available reinsurance capital to cover cyber risks in 2024, with insurance-linked securities (ILS) and catastrophe bonds one of the solutions expected to expand in use, modeller CyberCube has said.

CyberCube’s CEO Pascal Millaire believes that raditional reinsurance companies will start offering meaningful cyber capacity in 2024.

While cyber insurance is “one of the fastest growing lines of insurance to emerge in a generation,” Millaire believes that 2024 will see more reinsurers turning on to the underwriting opportunity.

Millaire said that many traditional reinsurers have not seen cyber as an area of growth, but that 2024 will “lay the groundwork for future growth of capital.”

He explained, “As reinsurers look at traditional lines of insurance being transformed by internet-connected risk, as well as the opportunity to participate in a rich new line of insurance, those reinsurers who were hesitant to dip their toe in the waters of cyber will increasingly see the imperative to do so.”

Millaire sees three drivers, the first being the availability of increasingly sophisticated cyber insurance analytics and risk models.

Secondly, Millaire highlights that new analytical tools are helping reinsurers to better understand the quality of portfolios they might look to write.

While third, Millaire states that “cyber is a risk that is too big to ignore.”

“As new reinsurers start offering cyber in meaningful ways for the first time in 2024, this will contribute “many new trickles” of capacity, rather than a flood of reinsurance,” Millaire said. “Over time, 2024 will lay the groundwork for future growth of capital, supporting the future of what could become one of the largest lines of P&C reinsurance.”

But, perhaps the most critical area of cyber market development, in just the last few months, is the emergence of a robust and rapidly developing cyber catastrophe bond market.

The cyber insurance market has lacked reinsurance, while cyber reinsurers have lacked access to retrocession and this has been a hindrance to cyber risk getting underwritten.

With now four 144A cyber catastrophe bonds launched, three with indemnity triggers and one with an industry-loss index trigger, the cyber cat bond market is rapidly developing and this could become a critical source of capacity to help encourage new reinsurers into the market.

Access to retrocession will help new cyber reinsurers in managing their PML’s and making their capital work more efficiently for them.

Read all about the seven cyber catastrophe bonds that have hit the market over the last year, three private deals and the four more recent 144A cyber cat bonds.