According to a report from re/insurance broker Gallagher Re, cyber models have done well to keep pace with the cyber insurance market in recent years, however, the ever-changing size and scope of the industry means that claims are often of a vector, frequency or magnitude that are still missing from the cyber models.
The report suggests that updates to models are typically in response to a new understanding of the risk being modelled, a change in the behaviour of the peril, or an improvement to the functionality and capabilities of the modelling systems and software.
It adds that given the dynamism of the cyber insurance market, the constantly shifting threat landscape and the immaturity of the modelling systems and software, cyber models undergo more frequent and significant updates than their natural catastrophe equivalents.
The report also references the early 2010s, when many leading Bermudian reinsurance companies were quick to establish natural catastrophe research teams to conduct in-depth evaluations of the vendor models, which ultimately lead to adjustments of the model so that they better reflected their view of the risk.
This investment in models and evaluation in…
