Global insurer Hiscox has announced the launch of a new cyber industry loss warranty (ILW).
The new product responds to an aggregation of cyber losses throughout the year and helps address the uncertainty around cyber tail risk for reinsurers, according to the firm. This allows the ILW to act as a hedging mechanism for cyber underwriters. ILWs are common within the property reinsurance and retro markets, but, according to Hiscox, this is the first that responds specifically to cyber losses.
ILWs allow organizations to obtain coverage based on the total insured loss of an industry, rather than the losses of an individual insurer. A third party is required to be an objective decision-maker on the size of the market loss. In this case, the market is the PCS Global Cyber Index.
“We have big ambitions in cyber, and our new cyber ILW is another important step forward in developing that market,” said Mike Krefta, CEO of Hiscox Re & ILS. “We believe innovations like this demonstrate our technical abilities and willingness to be a market leader in emerging risks.”
The new cyber ILW is part of the company’s drive toward innovation and individualized client solutions, Hiscox said. It joins other new Hiscox products like FloodXtra, which launched last year to provide reinsurance protection in a deregulating flood insurance market, and FloodPlus, its London Market insurance product for US coverholders.
