Although cyber risk premiums have expanded sizably in recent years with loss ratios that compare favorably to other product lines, the danger of accumulation risks is a key concern for the market, according to a study released by insurance industry think tank The Geneva Association.
The study, titled “Advancing Accumulation Risk Management in Cyber Insurance,” identifies three prerequisites to a sustainable cyber insurance market:
- Customers and insurers must facilitate resilience at the source of risk for the principles of insurability to apply.
- Insurers must be able to achieve an acceptable return on capital.
- Insurance markets need to be able to withstand shocks from extreme events, which means absorbing accumulation risk.
The concern about accumulation risk is widely held across the industry and is the reason the Geneva Association report is focusing on the market’s ability to withstand extreme events, said Anna Maria D’Hulster, secretary general of The Geneva Association (GA), in a forward to the report.
“Expanding the boundaries of insurability is not new for insurers. However, cyber risks are taking us into uncharted territory,” she added. “Both…
