“While certain software supply chains such as operational technology are quite hard to observe, there are increasingly very good data sets that detail known enterprise dependencies for technology like cloud service provider usage. Another is having confidence that models reflect the true network architecture of their insureds across the book of business.
One of the ways this has changed over the years is in the increased granularity in the terms and conditions that are included, for example: extortion sublimits and business interruption waiting periods. She noted that “the reflection of true exposure, transparency, and validation” has helped to increase acceptance and understanding of cyber risk in the ILS investor community.īaker explained, “Previously model inputs may not have been granular enough for sponsors to feel confident that their true cyber exposures were being represented in model outputs.
“While previously more straightforward structures were dominant due to the lack of modeling credibility, we saw 2023 kick off with the announcement of the first cyber cat bond sponsored by Beazley as well as a retrocession quota share by Hannover Re.”īaker said that what has really changed to stimulate this wave of cyber ILS activity, is improvements in models and the market’s understanding of them. Speaking with Artemis in a recent interview around the Monte Carlo Rendez-Vous event, Brittany Baker, VP of Solution Consulting, CyberCube explained why things have changed for the better in cyber and as a result the potential for increasing levels of cyber ILS activity now holds real promise.īaker explained that, “Cyber models have hit a level of maturity that are now allowing the insurance industry to expand both the reinsurance structures available and also be considered by the ILS market in earnest. This year feels like a watershed moment for the cyber insurance-linked securities (ILS) market, with tangible advances in use of ILS capital to support cyber risk underwriting, while cyber models have reached a level of maturity that promises there is much more to come, Brittany Baker of CyberCube told Artemis.
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