With a steadily growing frequency of reported cyber attacks, the prospect of a major cyber catastrophe — once a hypothetical question for discussion at the boardroom table — is now not a case of if, but when.
In 2022, cybercrime cost the global economy around $6 trillion. Based on current projections the annual cost could hit the $10 trillion mark by 2025. A cyber CAT event of global significance is probable within the next 18 months to two years. And while the scope of attack vectors brings new layers of complexity into the mix, the scale and magnitude of what may happen is cause of industry-wide concern.
The (re)insurance industry isn't sitting on its hands. Rising claims losses, the drive to deliver more sophisticated claims-loss modeling and the pressing need for coordinated action to combat cyber-risk exposure internationally have sent shockwaves through the insurance market. As underwriters tighten their underwriting criteria and capacity challenges have sent pricing upwards, (re)insurance buyers have explored alternate placement channels to manage their balance sheet exposure and the investment levels required to build a more robust defense layer.
With cyber expected to become among the largest single risk exposures, alternative markets and platforms such as insurance-linked securities (ILS) have become a positive talking point within the insurance sector and business circles in recent months, providing much needed capacity and scope for investment to cater for cyber's rapidly evolving risk profile.
Read Beyond The First Cyber Cat Bond to learn more about the emergence of the ILS cyber CAT bond, the digitization and growing data sophistication that's fueling the platform for cyber ILS growth, and the factors motivating ILS investor appetite for cyber risks.
