Are we heading towards Property, Casualty & Cyber (PC&C)? is the second cyber report by Capsicum Re, and also the question being posed by the specialist reinsurance broker.
A follow-up to the first report Addressing non-affirmative cyber, the broker’s latest white paper looks at ‘silent’ cyber and the likely evolution of the cyber market – the risk class now being described as “very real” and tangible.
“The current cyber insurance market is experiencing explosive growth, development, and change through the sale of ‘affirmative’ cyber cover, where cyber is explicitly evaluated, priced, and underwritten as a discrete risk,” read the new report, produced in partnership with Gallagher. “Despite this growth, it is not affirmative cyber which presents the market with the greatest concerns, nor the largest opportunities. Rather, ‘non-affirmative’ or ‘silent’ cyber is emerging as the critical area of concern.
“Cyber losses are materialising with increasing frequency across the property/casualty sector, demonstrating clearly that the bulk of the cyber exposure lies within non-cyber covers. Furthermore, there is uncertainty surrounding whether losses caused by a cyber event will be covered under these traditional lines of business.”
The report said the lack of clarity creates not only ambiguity for the insured but also unknown exposure for the insurer. It added that insurance firms are beginning to take a variety of steps to improve their understanding of silent cyber exposures.
Meanwhile Capsicum Re’s global head of cyber Ian Newman believes we have reached a point where cyber has become a very real, tangible risk class – so much so that the firm foresees cyber as being as significant a peril as property and casualty.
“In response, we have created this report, in collaboration with the most experienced names in cyber risk, to highlight the challenges and opportunities that lie ahead, and the solutions that exist on our journey to a marketplace supported by the three key of pillars PC&C,” he said. “But we must begin innovating today to ensure we, and our clients, are equipped to deal with that reality.”