Given the enormous economic loss potential associated with cyber risks, rating agency Standard & Poor’s feels it inevitable that insurance and reinsurance firms will look to both the government and capital markets to help in boosting available cyber risk capacity.
In a new report on the reinsurance market’s approach to cyber risk, S&P Global Ratings points out that the potential for cyber losses to cripple the re/insurance industry is clear, if a prudent approach to underwriting and accumulation management isn’t followed.
S&P also questions the ability of the traditional insurance and reinsurance market to deploy sufficient capacity to meet the market opportunity of cyber risk on its own, or whether that would be sensible, leading the rating agency to liken the growth of the cyber market to the catastrophe risk underwriting market after hurricane Andrew.
“We believe the lack of global standards, including a homogenous definition of cyber events, liberal exclusions, and relatively low sums at risk offered by (re)insurers for now are keeping the market in its infancy,” S&P explained.
The rating agency also notes that global cyber insurance has been very profitable, for…
