A recent report by Howden Re explores the evolution of the cyber (re)insurance market, advocating for a shift from viewing cyber risk merely as a threat to recognizing its potential as a significant growth opportunity. The report, titled Re-framing cyber risk: navigating threats and embracing opportunities, highlights a persistent imbalance in the industry’s perception of cyber risks compared to natural catastrophe (nat-cat) risks.
Luke Foord-Kelcey, Global Head of Cyber at Howden Re, emphasizes the importance of this shift, stating, “Cyber risks consistently top the rankings of risk managers’ concerns. To stay relevant to those buyers of insurance, as an industry, it is imperative that we embrace this class of business.” He further notes that the report helps carriers assess their appetite for cyber risks to ensure they recognize the full scope of opportunities within a more comprehensive understanding of the risks. These comments are noted in a Howden press release on the report.
“Thoughtful Recalibration”
The report draws on data from cyber underwriters’ modeled losses, providing a comparison between cyber and other classes of business. David Flandro, Head of Industry Analysis and Strategic Advisory at Howden Re, remarks on the need for a nuanced approach to cyber risks, “The maturing of the cyber market necessitates a thoughtful recalibration of how cyber risks are underwritten. A transition is necessary: from viewing cyber threats through a catastrophic lens, and instead recognizing the competitive advantage that can be gained through more nuanced and informed risk analysis.”
Foord-Kelcey further adds to this perspective by highlighting the practical steps for insurers, “Investing in cyber-specific expertise and leveraging refined risk models are key to navigating the complexities of cyber threats effectively. This approach will not only transform perceived vulnerabilities into competitive advantages but also enable our clients to capitalize fully on the burgeoning opportunities in today’s digital landscape.”
Informed Underwriting Strategy
The Howden report points out that while larger carriers often assume a disproportionate amount of nat-cat risk relative to cyber, those with relatively smaller balance sheets are more exposed to cyber risks, positioning themselves as leaders in this rapidly evolving market. The analysis suggests that continued investment in expertise, modeling, and analytics will allow (re)insurers to achieve a more favorable and diversified risk-return profile from cyber reinsurance underwriting. Overall, Howden Re’s report serves as a call to action for the (re)insurance industry to recalibrate its approach to cyber risk.
By advocating for a more balanced and informed underwriting strategy, Howden aims to lead a movement toward a greater assumption of cyber risk backed by rigorous analysis and strategic foresight. As the market landscape evolves, a shift could redefine the industry’s role in shaping the future of cyber resilience and security. These insights, drawn from the Howden press release on the report, underline the strategic pivot needed to harness the full potential of the cyber (re)insurance market.
Full Report: Re-framing cyber risk: navigating threats and embracing opportunities.
Source: Reframing Cyber Risk: Howden Re advocates for increased market engagement.
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