Page 79 - India Insurance Report 2023- BIMTECH

India Insurance Report - Series II 67

Experts are of the view that “The cyber threat landscape is constantly evolving, and the rate, method
and style of cyber-attacks is changing with it. The potential for new and emerging risks is arguably much
greater in cyber insurance than in other specialities”

A prime example of one of these risks is the growing threat of ransomware, which now accounts for
a large percentage of cybercrimes committed. In fact, it is reported that 80% of UK organisations
experienced a successful attack in 2021/22. Landmark events like the Colonial Pipeline ransomware
attack, which resulted in a $4.4m pay-out to criminals, as well as the growth in state-sponsored attacks,
have forced the industry to sit up and take notice.

The good news is that InsurTechs have been able to offer their assistance and are making a real
difference. CMO and Co-founder Melanie Hayes from KYND (a new breed of the cyber company)
stated that a recent report by Beazley has actually pointed to a downturn in the rate of ransomware
attacks, and this can be linked to better visibility and management of this particular type of threat”.

Though firmly established as a well-known concern, since cyber risk remains dynamic and complex,
it may be a long time before cyber risk finds itself off a list of emerging risks.

Rate increases for cyber insurance started to stabilize in 2022 following a period of recalibration by
cyber insurers to stem loss ratios as they put even more emphasis on underwriting discipline with a
focus on policyholder controls and overall cyber hygiene.

Primary and excess cyber insurance renewals were flat to +25% in the fourth quarter of 2022 - a big
change from possible +200% renewals seen not too long ago. There are signs that capacity is broadening,
according to WTW’s “Insurance Marketplace Realities 2023.”

As per a WTW survey report, an increased level of competition from cyber underwriters has led to more
nominal rate increases when organizations can demonstrate good cyber security controls year over year.

2023 has already seen two significant developments in the cyber market. Specialist insurer Beazley
launched the market’s first cyber catastrophe bond. The $45 million bond gives Beazley indemnity
against all perils more than a $300 million catastrophe event, with the potential for additional tranches
to be released through 2023 and beyond.
Beazley said this is the first time that a liquid Insurance-Linked Securities (ILS) instrument has been
created for cyber catastrophe risks.

The Insurance Journal examined ten industry sectors that could see new and emerging risks in 2023
and beyond. One of the 10 was Cyber Complexities

According to a senior cyber practice leader at Lockton Re, Given the ongoing challenge of the
imbalance of supply and demand for insurance capacity, the opportunity for material ILS transactions
to occur there is to be seized in 2023, 2023 could prove to be an inflexion point, in which ILS becomes
a regular source of capital to address the catastrophe components of cyber risk which would provide the
much-needed additional capacity to flow into the market.
Recently, the Lloyd’s Market Association issued a bulletin to update exclusions for state-backed cyberattacks
in standalone cyber policies to continue efforts to limit systemic risk and clear up coverage uncertainty.