Re/insurers in Bermuda see increased cyber premiums in 2018
Commercial insurers operating in Bermuda reported affirmative cyber risk gross written premium of approximately $2.1 billion in 2018, according to the Bermuda Monetary Authority in its annual cyber underwriting report.
That constituted a significant increase in the $845 million premiums earned in 2017.
Meanwhile, aggregated incurred losses arising from affirmative cyber policies among commercial insurers totalled $239 million in 2018, the BMA said, compared with $130 million of equivalent losses in 2017.
Cyber claims paid by Bermuda-based commercial insurers were around $99 million for over 3800 claims, up from $46 million for over 6600 claims. Direct policies contributed to 89 percent of total claims in 2018, compared with 66 percent in 2017, with reinsurance contributing only 7 percent, down from 29 percent in 2017.
Meanwhile, Bermuda-based captives took in 53.6 percent more affirmative cyber related gross premiums in 2018 than they did the previous year, the BMA said.
Gross premiums amounted to $61 million, while net premiums were $31 million, the BMA said. It also noted an overall increase in the number of captives on the island writing cyber coverage.
Class 3 insurers led the way, accounting for 67.8 percent of the affirmative cyber coverage written by Bermuda-based captives. More than half - 56 percent - of the affirmative cyber written by Bermuda captives was on a direct basis, with the remainder being reinsurance.
The BMA warned insurers to be resilient in terms of capital and liquidity, and to establish “proper risk management and governance processes - particularly in the areas of risk quantification, especially for non affirmative, cyber exposures - aggregation, and contagion from an underwriting perspective.”
The BMA added: “Insurers should consider incorporating in their stress testing models the correlation and potential loss arising from a global cyber attack that could impact their own operations, while at the same time being required to pay claims from their insurance operations.”
