Leading US cyber insurers including AIG, AXIS, Chubb, Hartford, Liberty and Travelers and the US operation of Beazley have combined forces to set up a new cyber risk pool to tackle the growing threat of cyber risk.
The new pool, which goes under the snappy title CyberAcuView, contains six of the top cyber insurers in the US.
In forming the pool, the members have pledged to tackle cyber risk through stronger collaboration with regulators and law enforcement, deeper analysis of the latest cyber trends to understand the origin of losses and to advise policyholders.
Also, they will be examining new solutions and improving policy language.
Mark Camillo, previously Head of Cyber at AIG, has been appointed CEO of the pool. In a statement at the launch of the pool, Mr Camillo said that: “Combining resources from across the insurance industry will allow us to better understand cyber trends, anticipate and potentially mitigate future attacks, and help improve overall cyber resilience”.
The formation of the group comes after the cyber market has seen another year with high-profile loss events. In 2020, cyber insurance policy premiums rose by 28%, according to AM Best in a new cyber report.
The report also argues that the profile of the cyber attacks is changing from third-party (e.g. stealing identities) to first party claims (e.g. shutting down systems) such as the recent cyberattack on the Colonial pipeline in the US. 75% of cyber claims are now first party claims according to the report.
In the US market, the loss ratio for cyber insurance for 15 out of the 20 top cyber insurers rose to 67.8% in 2020, up from 44.8% in 2019 according to Insurance Journal.
“The rate increases for cyber insurance outpaced that of the broader property/casualty industry, but the increase in cyber losses outstripped the rate hikes, which suggests more trouble for 2021 as ransom demands continue to grow” said Sridhar Manyem, AM Best director in a statement accompanying the AM Best report.
The US Cyber market is still relatively small in comparison to other lines of business, with premiums on the direct side at $2.7 billion according to Fitch.
However, with the world growing ever more dependent on technology for work and personal use, this market will only grow and expand over time.
In doing so, the industry will not only need to collaborate but adopt new risk modelling techniques to better understand and price their risks better.