During a panel discussion at the ILS Bermuda Convergence 2025 conference yesterday, speakers discussed whether they believe that cyber has the potential to reach peak peril status, while emphasizing that ongoing efforts in educating remain key as the cyber market continues to grow.The panellists explored how, as the cyber insurance market continues to grow, so too does interest in bringing capital markets into the fold, and how insurance-linked securities (ILS) can play a meaningful role in this evolving line of business.
Moderator of the session, Jo Syroka, Director of New Markets at Fermat Capital Management, asked the panellists whether they believe cyber will eventually become a peak peril.
All three agreed that it will.
However, while cyber has not yet reached that point, Syroka asked how the industry might get there.
Ian Newman, Global Head of Cyber at reinsurance broker Gallagher Re, acknowledged that continued market growth is a major driver.
“No question, growth is part of the answer to this. Obviously, if there’s more policies covered there’s more opportunity for these losses to be a lot bigger. And I think we only have to look at the examples of the recent attacks in the UK, where we see Jaguar Land Rover didn’t have cover. Many of the other retailers in the year didn’t have cover, either. So, you can see how low the penetration rate is.”
Newman also added: “There’s no question, cyber is going to be as big as any other peril. We’ve talked about how cyber is going to be as big as property or casualty, and the reason for that is very simple.”
Newman also stressed that companies should be purchasing cyber insurance given the severity of potential losses from a cyber-attack, identity theft and financial damage.
“It is inevitable that we are going to be a much bigger industry that people are going to be buying far more. It’s just a question of going through this almost mentality change that we need to do, and that potentially even has to be generational for that to be achieved,” he added.
As the discussion turned to ILS, Syroka asked what ILS managers and investors should be doing to prepare for cyber becoming a major component of the ILS market.
Newman said: “In my eyes, unless you’re in it, you don’t learn about it. And I think there’s a few reasons for that. We see the second anyone commits resource, money, capacity, even if it’s a very un-meaningful amount, suddenly the engagement levels go up. Suddenly they’re forcing themselves to learn, and I think that’s important.”
Richard Gray, Head of Third-Party Capital at specialty insurer Beazley, stressed the importance of education.
“You need to go through the education process. I think for us it’s about educating your clients. So, it’s educating the investor so that they feel comfortable putting their capital to risk via yourselves and I think ultimately, also trying to understand what other benefits, not only some of the novelty premiums that we’ve already talked about, but also the diversification against potential nat cat events or other casualty events that might be within your portfolio.”
Turning to modelling, Brittany Baker, Head of Solution Consulting & ILS at CyberCube, a specialist modelling firm for cyber risks and exposures, discussed the ongoing work to model potential cyber catastrophes and the importance of staying ahead of emerging threats.
“Now we have hundreds of people whose entire job is focused on being ahead of it, making sure that the models are forward looking and pulling in the capabilities that we see threat actors playing with on the side, before they become events that hit the insurance industry.
“I think as an industry, we’re also just way more prepared as well to not be surprised, to not have something that has fully not been put into models, whether they be external or internal to a specific carrier,” Baker explained.
Also read:
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