Hot on the heels of news that so-called “silent cyber” losses accounted for the bulk of last year’s $3bn NotPetya bill, Aon has announced a potential solution.
The big-three broker said its reinsurance arm had build a silent cyber product that will bring $350mn of capacity to underwrite non-affirmative cyber exposure in the portfolios of insurers.
Aon said that in the last 18 months regulatory attention and high-profile attacks such as NotPetya and Wannacry had raised awareness of how cyber incidents can impact multiple lines of business.
Carriers are now under increased pressure to identify, analyse and mitigate their exposures, Aon said in a statement.
“However, challenges include locating the exposure, and developing scenarios that are both realistic and relevant to that carrier.”
Now the broker said it had sourced $350mn of capacity from reinsurers in Bermuda, London and Europe to underwrite that risk.
The new product will protect against non-affirmative cyber risks, where cyber losses fall outside of a standard cyber policy and on to another cover such as a property policy, where it is not explicitly excluded.
It will also provide clash cover on an interim basis to protect against the risk of multiple hits on the same policy from a single catastrophic event as insurers get a handle on their silent cyber exposure.
Aon said that the product was supported by its own analytics to which can identify silent cyber exposures through wording and threat analysis. The broker’s cyber teams can then quantify the exposure and create a clash cover reinsurance product.
Going forward, Aon said it can then establish appetite and methodology to underwrite, price and reinsure affirmative cyber across multiple lines of business.
In a statement, Aon’s newly-appointed global head of cyber innovation for its reinsurance team Luke Foord-Kelcey said: “Our process-led and forward-looking approach to assessing, quantifying and transferring silent cyber will lead to improved coverage, pricing and capacity through robust, modelled results and strong reinsurer partnerships.
“But most importantly, it is about how we end the ‘silence’, strengthen the cyber (re)insurance market and make it future-proof with more transparency, opportunities for growth and enhanced protection across the value chain.”
Yesterday, re-Insurance.com reported that the industry’s ultimate insured losses from the June 2017 NotPetya virus will now exceed $3bn with the majority emanating from silent - or non-affirmative - coverage, according to the independent loss adjudicator, Property Claims Services (PCS).
The update was an increase on a Q2 loss estimate which calculated the total insured loss at $2.7bn from the cyber virus.
The loss upgrade coincided with the launch of a new cat cyber loss index from PCS that may eventually lead to greater reinsurance and retro capacity being devoted to the fast expanding class.