The Expert Podcast

The cyber insurance market is certainly growing, and one of the largest reinsurance companies, Beasley, has obtained a cyber catastrophe bond to enable them to grow their market. It's a 45 million dollar bond that gives them indemnity against all perils in excess of a 300 million dollar catastrophic event, and they can also add additional amounts based on their needs. This is the first such global insurance catastrophe bond, marking a significant development in the industry.

It's the first time that a liquid insurance-linked security instrument has been created for these risks. The reason behind this innovation lies in the growing market, as insurance companies recognize the need to add coverage and capacity for these excess and surplus lines or their reinsurance. The bond is designed to cover them in the event of multiple catastrophic and systemic events, ensuring that insurance companies have excess capacity to handle a surge in claims resulting from widespread events.

It's vital to allow the supply of capacity in the cyber insurance market to increase to meet the growing demand. Most of the new coverage for commercial lines, especially, is happening in the cyber area. While additional coverages for things like property damage and personal liability have stabilized, the demand for cyber insurance is skyrocketing, with many businesses lacking coverage. Any new coverage represents incremental growth in this rapidly expanding market.

Reinsurers and underwriters are actively seeking additional capacity to ensure liquidity, enabling them to transition from excess and surplus lines to admitted carriers and provide coverage for their insureds. The CEO of Beasley emphasized that this move helps bring new capacity to the global cyber insurance market, allowing it to keep pace with the rapidly rising demand. The surge in demand for cyber insurance is unlike that in other areas, as many companies are scrambling to add coverage to mitigate cyber risks.