Experts assess cyber risks, need for federal backstopPosted On: Feb. 15, 2023 11:49 AM CST
NEW YORK — Having the federal government help if there is a cyber-related catastrophe is a good idea, but only if it is restricted to serving as a backstop in a situation that threatens the insurance industry’s survival, a speaker at the Professional Liability Underwriting Society’s cyber symposium said Tuesday.
“We're the ones with the expertise, not those who work for the government,” said Jeremy Gittler, New York-based head of cyber and technology-Americas at Axa XL, speaking during a session on cyber market capacity constraints.
“We don't want a situation where they're saying … you can only deploy this much capacity, you have to get this much reinsurance,” he said. “None of us want that.”
“But if it is a true backstop that — after whatever number you want to pick —the government will come in and take up the rest of that so the insurance industry can survive … it's a wonderful thing.”
Mr. Gittler spoke during one of several wide-ranging sessions on cyber issues.
During a session on the state of the cybermarket, Courtney Maugé, Atlanta-based senior vice president and cyber practice leader for NFP Corp., said cyber pricing is “where it needs to be to remain profitable. But we're all a little bit hesitant” because of ransomware.
“We know that we haven't seen it as much from a frequency perspective, but we do know the severity can still be there,” she said.
Ms. Maugé questioned whether this lull is because “they're busy in Russia or Ukraine, and “it's all going to come back really hard.”
Additional capacity coming into the market from traditional insurers as well as managing general agencies and insurtechs “is probably going to have an effect on rate,” said Josh Ladeau, CEO of Hartford, Connecticut-based Trium Cyber U.S. Services, Inc. However, he said the additional capital’s impact may be limited because the various players are “not all competing in the same space.”
Panelists wrestled with the question of addressing war risk in cyber policies during a session on war, widespread events and systemic risk.
“Let’s just own up to the fact that there could be a cyberattack that results in an impact that would be similar to a war event. And how you define that is a long road and takes a lot of thought around how you address that,” said Robert Wice, underwriter, large risk errors & omissions, for the Beazley Group in Farmington, Connecticut.
“But for the sustainability of this marketplace, to ensure that we contain any sort of volatility as best we can,” it is critical to get all stakeholders involved, he said.
During a session on reinsurance, Simon Welton, executive vice president at London-based cyber underwriting company Envelop Risk, said, “If there is one improvement that I see,” it is “that this line of business feels a lot more collaborative across the whole value chain.”
There is “a dialogue and there's a willingness to share what we can,” which is “really important because we're all learning something new,” he said.