Growing cyber book could damage re/insurers’ financial strength
A growing cyber book could present a risk to a re/insurer's financial strength, ratings agency AM Best has said.
A new AM Best Special Report, titled Scrutiny of Management Approach Increases as London Cyber Insurance Market Grows, says that while cyber risk has gained significant attention in recent years following a number of high profile hacks and breaches, the aggregate loss potential of cyber and its implications for the London insurance market are less clear because insurers have not yet experienced a systemic cyber event from which they can draw robust conclusions.
AM Best notes that, as one of the world's leading hubs for insurance expertise and innovation, the London market plays a fundamental role as a capacity and knowledge provider for complex cyber insurance and reinsurance.
“The majority of London players have an appetite for cyber and have developed product offerings in this space,” it said. “This has supported their business diversification strategies and enhanced their competitive positions as they seek to leverage their niche technical expertise. At the same time, AM Best believes that given the rapidly evolving nature of cyber risk and the lack of clarity as to its aggregate loss potential, a growing cyber book could represent a risk to a re/insurer’s financial strength if not managed appropriately.”
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