14 March 2014ILS

Cyber pricing tool promises to shake up market’s approach

Kalista Global is set to launch a cyber terrorism pricing product that will help the industry move away from an “esoteric” view of risk and towards an accurate and informed view of cyber exposure.

That is the news from Spencer Conway, CEO of Kalista Global, who tells Bermuda:Re that the goal of the company’s new product, Cyber Price, is to deliver the industry standard in the pricing of cyber risk that will help global firms to accurately assess their cyber exposures, while offering solutions to mitigate their risk.

Partnering with leading cyber security firms Advanced Monitoring Security Services and Trinity Group, Kalista Global’s new product aims to challenge the existing and somewhat “esoteric” view of cyber risk that exists today, says Conway.

Rather than looking at past losses and trying to approach matters from that angle—one copied from the catastrophe modelling industry—Conway says Cyber Price will employ company risk assessments to identify and highlight exposures and shortcoming and recommend remedies and best practice.

The insurance industry will then be able to apply this knowledge to their pricing of cyber terrorism risk, meaning underwriters will not be broadsided by unexpected losses. “It is about minimising the potential risks for insurers writing this business”, explains Conway.

Conway says that at present it is extremely difficult to quantify cyber risk. “The goal is to bring peace of mind to the board room; that they have done their due diligence and risk mitigation” as they contend with rising risk from cyber attacks.

Thorough risk assessment, mitigation and a new data driven pricing model by Cyber Price will help provide this clarity.

Conway says that the company intends to roll out an accompanying insurance product shortly, which will complement and leverage Cyber Price, and will offer business interruption solutions to the market following any cyber attack.

An appetite for innovation

Conway says that Kalista Global is keen to benefit from “an appetite for all innovation” that is permeating the reinsurance sector at the moment.

Cyber Price appears well-poised to benefit from rising investor interest, particularly against a backdrop of a number of high-profile cyber attacks.

“The good news is that if you are able to innovate, you can expect to benefit from ample investor capacity”, concludes Conway.