Beazley, Munich Re, and Gallagher Re study reveals cyber market resilience

Findings from a year-long collaboration between Beazley, Munich Re, and Gallagher Re indicate that the cyber insurance market can withstand a plausible yet remote malware event under current parameters.

This information was released in a whitepaper that aimed at building a shared understanding of the potential systemic losses the cyber-insurance industry might face from various extreme malware events.

Given the uncertainties surrounding cyber tail accumulation risk—which currently limits investments, discourages new entrants, and hinders sustainable market growth—this collaboration seeks to generate insights that will stimulate dialogue within the cyber insurance industry.

The project’s key findings will be publicly accessible and designed to be easily understood by a wide range of stakeholders.

The goal is to promote further advancements in cyber accumulation risk modeling and provide clarity and transparency regarding concerns about the insurability of tail risks from malware events.

Paul Bantick, Chief Underwriting Officer, Beazley, stated, “The world of cyber threats doesn’t have to be feared, but you do need to be prepared and understanding accumulation risk is key to unlocking the growth potential of the cyber insurance market. We are pleased to have been able to contribute our deep expertise in both cyber underwriting and cybersecurity to this joint project in the hopes that it leads to incisive discussions and bolstered confidence in the cyber market.”

Jürgen Reinhart, Chief Underwriter Cyber at Munich Re, commented, “Accumulation risk deters potent risk carriers from entering the rewarding cyber business, leaving clients unprotected in their digital ventures. While challenging, understanding systemic cyber risks is crucial for the industry’s growth. Munich Re continues to invest in collaborations, building a foundation for sustainable market expansion.”

Ian Newman, Global Head of Cyber at Gallagher Re, said, “This joint project aims to enhance understanding, increase confidence from external capital and regulators, support new market entrants, and foster public discourse to help the industry effectively prepare for and address incidents swiftly and effectively. Each party has brought specific expertise to the table, including modelling frameworks, making it a truly comprehensive guide for the industry.”

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