According to analysts at Moody’s, reinsurance support plays a large role in the cyber insurance market, as primary insurers continue to reinsure cyber risk through quota share arrangements to obtain expertise and capital protection.
Citing Gallagher Re’s 1st View Emerging Equilibrium published in January this year, Moody’s notes that reinsurance pricing for cyber coverage continued to increase with higher attachment points and some treaty limit reductions.
“Reinsurers continue to maintain aggregate caps on quota share reinsurance agreements to manage their accumulation risk,” suggest the analysts.
They continue, “As a result of changes implemented by primary insurers, reinsurers have slowly increased their risk tolerance for cyber risk, and some new capacity has come to the market.
“However, reinsurers are still cautious given the potential for systemic risk and that a widespread cyberattack that escalates globally could result in billions of dollars in potential claims payouts.”
Meanwhile, Moody’s states that the alternative capital market has significantly grown its share of the property catastrophe reinsurance market, but is still in the very early innings…
