In an industry that is stagnating, Bermuda’s re/insurers have been quick to embrace the potential growth in cyber risk—but they are also wary, as Bermuda:Re+ILS finds out.
Tipped to become a big growth market—if only they can find a way of pricing it correctly—Bermuda’s re/insurers have not been shy of entering the world of cyber re/insurance in recent years with new hires and launches emerging on a regular basis.
Most recently, Hiscox promoted Matt Webb to group head of cyber, responsible for developing the group’s cyber strategy and managing cyber risk exposure. He is based in London but will travel globally to develop its cyber capabilities, including in the US.
He previously served as the head of technology, cyber and data underwriting for Hiscox UK and Ireland.
That announcement followed Hiscox combining the expertise of its healthcare and cyber underwriters in Bermuda and London to launch Healthcare Threat Protect, an insurance product that deals with a hospital’s professional and general liability as well as its growing cyber exposures.
According to Hiscox, the line between professional liability and cyber risk has become increasingly blurred for US hospitals. Healthcare Threat Protect is an all-in-one policy with one integrated wording, combining the class-leading underwriting expertise of Hiscox’s healthcare and cyber teams in Bermuda and London.
“For US hospitals, the increasing integration of technology in diagnosis and treatment means the distinction between cyber risk and professional/general liability has become less clear cut,” says Justin Keith, vice president of Bermuda healthcare at Hiscox.
“Rather than expecting hospitals to buy separate insurance cover for each risk, we’ve combined our healthcare and cyber expertise to develop an all-in-one cyber risk and professional/general liability protection. Healthcare Threat Protect is a comprehensive product that, as cyber risks multiply in their number and complexity, solves a growing problem for US hospitals.”
Into the cyber space
Many other Bermuda companies have also been moving into this space.
Last year, ACE launched a cutting-edge cyber facility which, according to the re/insurer, goes beyond standard risk transfer by incorporating a comprehensive risk management solution into a single policy purchase.
Providing up to $100 million of primary capacity, the facility has been launched in response to a growing demand for cyber security insurance.
Earlier this year, Bermuda intermediary Freisenbruch-Meyer Insurance Services (FMIS), in partnership with AJ Gallagher and DUAL Corporate Risks, introduced Security & Privacy, a cyber liability protection product. The product’s release coincides with an increasing demand from Bermuda-based businesses for cyber insurance protection, according to FMIS.
Aspen Insurance named Raheila Nazir, formerly of AIG Europe, as head of international cyber risk and Nicholas Lang as underwriter for cyber earlier this year, saying that the appointments bolster its position in the cyber market internationally.
And also this year IronPro, the professional liability unit of Bermuda-based Ironshore, introduced a suite of enhanced risk management services for cyber policyholders.
The firm has engaged BorderHawk, an Atlanta-based security firm, to offer services that analyse cyber activity to detect questionable client events.
While the industry clearly sees a big opportunity in cyber risk, it is also realistic about the challenge of understanding this complex risk and pricing it appropriately.
In a survey last year, cyber risk has emerged from nowhere to be ranked as the third most worrying risk in Bermuda for re/insurance industry professionals.
It had never previously been cited as a concern in the annual PwC/CFSI Insurance Banana Skins survey before its appearance in 2015.
Market conditions were seen as the greatest risk or ‘banana skin’ in Bermuda, followed by regulation, then cyber risk.
Arthur Wightman, PwC Bermuda leader and insurance leader, said at the time: “As an industry that handles large amounts of other people’s money and personal data, insurers are prime targets. As a result cyber attacks and data breaches are seen as especially urgent by the industry, from the standpoint of a threat but also as an opportunity.
“With material losses now in the billions, the demand for insurance to cover cyber risk has risen considerably.”
Hiscox, UK, Matt Webb, Bermuda, North America, Insurance, Reinsurance, Cyber, Risk management, Technology, IT, Data, Healthcare, Liability, Europe