Moody’s RMS has introduced a cyber industry steering group to foster industry-wide efforts in response to the expanding global cyber insurance market.
Key industry players, including Munich Re and Gallagher Re and global cyber risk management firm Bitsight, have joined the group. Additional partners from the insurance sector are expected to follow suit.
Given the significant growth potential in cyber underwriting, the group was established to address current barriers to growth within the cyber insurance market.
These challenges include the need for standardized practices across various market functions. Additionally, in the rapidly evolving realm of cyber risk, there needs to be more confidence and more assurance among insurance boardrooms, investors, and regulatory bodies.
Members will provide guidance and direction to develop and support a long-term strategy that enhances transparency in risk analytics and advances the industry’s understanding of cyber risk. This increased comprehension of cyber risk will help create the confidence needed for the industry to capitalize on growth opportunities, Moody's RMS said in a press release.
The company also announced significant increases in its investment in cyber risk analytics to unlock the market’s growth potential. The heightened focus on cyber analytics aims to establish a unified standard for assessing cyber risk in underwriting, systemic aggregation, and risk management.
Moody’s RMS general manager Michael Steel pointed to a clear need to accelerate growth in the market. However, there are still many legitimate concerns surrounding risks and regulations for the segment.
“The introduction of Moody’s RMS Cyber Industry Steering Group represents a significant step forward in helping focus these investments and bring together industry-wide efforts to solve challenges and ultimately create a unified currency of risk across underwriting, aggregation, and risk management,” Steel said.
Munich Re chief cyber underwriter Dr Jürgen Reinhart added that cyber insurance is a dynamic business. With further expectations of growth, it is vital to have reliable and widely accepted models in place, he said.
“Initiatives like these play a significant role in improving industry-wide understanding of cyber accumulation risk and underwriting quality, while also strengthening stakeholder confidence. Munich Re is proud to collaborate closely with other insurers and vendors on this initiative as we seek to meet the demands of the growing market,” Reinhart said.
Likewise, Gallagher Re global CEO Tom Wakefield emphasized that cyber represents a systemic risk and a huge opportunity for the wider industry.
“Gallagher Re’s dedicated cyber team spends an incredible amount of time educating potential investors and capacity providers, getting them comfortable with the risks, and addressing correlation concerns to bring in that additional capital,” said Wakefield.
“So, by combining the expertise and insight of leading cyber (re)insurers, brokers, and catastrophe risk modelers in an industry steering group, we’ll produce a powerful mechanism for advancing the wider industry’s view of cyber risk. We are proud to partner with Moody’s RMS on this important initiative.”
Bitsight chief risk officer Derek Vadala also commented on the steering group, saying that strong partnerships are essential to successfully managing cyber risk and the complex, persistent, and asymmetric threat it presents for organizations.
“Bitsight is excited to further expand its partnership with Moody’s RMS by joining other leaders in the insurance industry in helping manage this critical, exponential risk. As the creator of the cyber security ratings market, Bitsight helps organizations by leveraging its vast set of cyber exposure data and its proven cyber risk models which provide correlation to cybersecurity incidents. We look forward to working together in order to help address this important global issue,” Vadala said.
Elsewhere in the sector, a recent report pertinent to the cyber insurance segment answered concerns raised by ILS investors regarding possible correlations between cyber events and stock market performance.
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