Those insurance companies that have already dipped their toes in the water are building a risk database that might give them an advantage. However, unlike hurricanes and other natural events, cyber risks continue to change so it’s questionable whether what happened in the 00’s is relevant to the risk landscape in the ’20s and beyond…:
While there are “huge opportunities” on the horizon for the cyber insurance industry, cyber insurance underwriters still face the challenge of not having enough historical data to work with.
“It’s really scary to underwrite something when you just don’t know what the potential losses could be,” said Brian Meredith, managing director at UBS Group AG, during a panel discussion on trends in the property/casualty insurance sector at S&P’s 2019 Global Insurance Conference in New York. “There’s lots of opportunity here, but we need a lot more data to expand it.”
This lack of data has led underwriters to approach cyber cautiously so far, with small limits and using a lot of reinsurance to protect themselves, said John Iten, director of S&P Global Ratings.
Panelists at the PLUS Cyber Symposium in New York last month echoed these concerns, with Bob Parisi, managing director and cyber product leader for Marsh, stating that one solution could be to model how the property market has historically underwritten risk, Insurance Journal reported.
“The property market is able to sustain bad hurricane years … To be sustainable, you have to underwrite to the risk,” Parisi said at the PLUS conference. “So go next door, ask the property guy for his rating model and start applying it. There are solutions here that can solve some of these problems.”